what is the deal j.p. morgan gets its money some poor farmer gets screwed and john corazon what happens to him he gets off scot free what is this exactly. what do you do construction. if we wanted something we just took it you didn't even think about it. but you should keep it. all here to talk about what this says about the power of too big to fail banks and the connected progeny they produce is mark melinde he's host of uncorrelated investing and author of high performance managed futures the new way to diversify your portfolio he's been in the derivatives industry as a trader in working at funds for a very long time welcome to the show thanks for being here. yeah so let's start from the top ok with m.f. global the focus is really bad and where is that our customers getting their money back which is one part of the story and a big one but you see the importance slightly differently because you are in the

trenches you've been in the derivatives industry a long time you've seen a lot why is this case so important in your view. it's about more than the m.f. global customers this is about the core pillar of the futures industry and market integrity and stability and it's also this amazing story about how they're too big to fail banks just every time the explosions get bigger and bigger two thousand and eight the mortgage derivatives crisis which someone should be in jail for by the way that exploded and then now we have m.f. global this is pension lee a large is fraud committed by the two big banks you know there are organizations that you can look at and say they have their fingerprints entirely on this situation it's been documented and there's not an apparent investigation according to my sources the department of justice does not have an open file on m.f.

global and they're all even though i have to louie freeh who was he's involved in this is entirely bizarre so it's a bizarre kit so you're basically saying fraud and you're saying it's not being prosecuted is not being followed up on a sobbing and that's a gated why i got off first off for the reason i say fraud in congressional testimony they said the documents were falsified and number of occasions the party said documents have been falsified there's there's documentation of very unusual behavior between regulators withholding documents before a bond offering now this particular document that was withheld by a regulator contained critical clues as to how the trade was structured and how that trade was structured as and higher repairs are and this is one that even be investigated and why do you think that would be what you think is going on here. well you know i'm not the expert too big to fail just started to get involved with

this from the commodity standpoint but i've got to tell you there's a significant amount of money that's going to be extracted off of the m.f. global carpets that's apparent to me it's also apparent that some of the early transfers of money. you know j.p. morgan based on the information i have in front of me has a lot of questions to answer and i don't know why they're not being asked these questions let me ask you this question what would happen to john. and to m.f. global if if this wasn't john chorus line if this was just some normal guy who wasn't from goldman sachs it wasn't politically connected was just a normal fund manager and this was has been there when. you know took customer money what would happen to him what would happen to the fund. ok first off the regulators would come through the door they would us the door down ok they would throw the guy up against the wall get a spotlight in his face and say give me the organizational chart and go down the

list boom boom boom boom boom someone would be in jail right now if this were not john corps i'm curious and you know you have been some of your information according you has been summoned by congress you you've been investigating this so what is the biggest evidence that you have that implicates john corazon and wrongdoing or shana's on behalf of the regulators thing you say is unfair ok first off let me start by saying that my an article i wrote was mentioned in congressional testimony and i have provided documentation on the f.c.c. document withholding scandal but in my opinion is a pretty powerful document and should be investigated a c a t c commissioner has even mention that that as you see documented issue should be investigated there are a lot of issues and we were yet start there's a list i was a list of about ten eleven different issues that should be investigated and i don't

know that any of them are being investigated so give me like the most compelling examples a few of the very most compelling bits of evidence you have ok. there is critical risk disclosure that again discusses how the trade structure was set up the f.c.c. withheld this document prior to a r. and offering taking place now there are said to be a number of different meetings that mr corps and i had with the regulators and then this document was withheld document was later timestamped i the regulator as being received after the bond offering that's not the case it was received may thirty first before the bond offering so they put this document on the a good database and then wait about three four months december fourteenth they take it down and they put it back up with a new timestamp identifying the correct time and date that document was submitted

so are you are you saying basically that it shows that the regulators are working in my opinion on behalf of mr gore's on now that needs to be investigated i can only go so far you know i mean i don't have subpoena power i don't have access to the witnesses you know and that's another crazy thing about this entire m.f. global situation it's been left up to individual people for the most part you know if you look at the commodity customer coalition who's been fighting the battle from day one those guys are a group of individuals no one knew each other when they came together and you know for the most part are operating off a credit card and they're fighting against too big to fail banks that have unlimited pockets and have indigence a very underhanded maneuvers in my opinion i mean everything that you're describing sounds like what i use as a metaphor and my set up for this whole story of thousands like the mafia or

a mexican drug cartel. ok i think that i don't want to sound too extremis here but if you compare how a mexican drug cartel operates just do this without emotion take a look at how they operate and then apply that same template to how the too big to fail banks operate there are a lot of differences but one of the big differences is that too big to fail banks influence rules and regulations to make what should be fraud legal and one thing i want to bring up by if we can bring up the zero hedge article that talks about this and give an example of this basically in their writing that the problem here is that the existing laws against pillaging customer accounts and other acts of fraud are in conflict with the bankruptcy statute designed to make the world safe for large banks and over the counter derivatives does that get to kind of the core of what you're saying with someone the bankruptcy process is another you know there

are so many cans of worms in the bankruptcy process appears to me that be read it give us i want you start getting into the bankruptcy process you know like for instance why louis freeh is even considered to be a bankruptcy trustee these trustees can make hundreds of millions of dollars off of these liquidations the trustees end up coming out much further ahead than to the m.f. global customers and then why is this whole process was put into a simple liquidation as opposed to a chapter seven liquidation which is awarded to the futures market integrity is another subject to be covered in the rough and you know you've been in as industry for a very long time you said you believe the two thousand and eight mortgage derivatives whole collapse you believe that that was fraudulent there was fraud going on there that when i prosecuted is this and you're paying in the same or worse. worse much worse and why do you think that is well first off the staggering influence of

what's going to happen i don't know that people understand the integrity of the commodity markets has been put in jeopardy i have this entire scandal that is on precedent and was gone by certain people in regulatory power observing it and a while doing this destruction to take place that's crazy you said it's a watergate of our time and email do you stand by that absolutely as i said it on t.v. i'm of sort of sons you bill all right well i want to create you i appreciate you being here to tell us everything you've been fighting from the trenches that was mark maleng he's author and host of uncorrelated investing and that's it for our show thank you so much for tuning in you can feel free to follow me on twitter at lauren lyster you can give us feedback on the show at youtube dot com slash capital account you can also go there i suggest you subscribe and all of our full shows are up there along with all of our interviews our past words of the day we did

a good one on futures trading so you might want to go look that up as you. yourself on this and that global story and also be sure to put your comments because we will do your feedback it is tomorrow i will respond to the very best and as always you often see responses from our producers right there on the post to you but for now from everyone here at capital account thank you so much for watching come back tomorrow and have a great night. the

u.n. files pressure on the syrian regime to step down as the general assembly adopts a non-binding resolution russia says the draft fails to address the armed opposition. increases the next ballot could be creeping closer despite the news ever mounting demands while some nations who have their national currencies are proving to be far better off. libya marks a year since the revolt that eventually brought down the adopt the regime but rival militias still run on the check and the interim leadership is said to have no real power. alone a show coming up stay with us here on our to. welcome

to the lower show we'll get the real headlines with none of them are safe to live in washington d.c. now and i are going to take a look at a new development for the occupy movement one alabama man it decided to file papers for an occupy wall street super pac but does that kind of contradict the ideals of occupy also we hear a lot about cyber warfare these days but is this threat being hyped more than it needs to be our guest tonight compares it to the build up to the war in iraq and from a bill to outright bans of or should i make that punishable by life in prison the

hearings on the hill about contraception that didn't include any limit you got to wonder what's going on in this country is a war on women you might even call it a of a jihad we're going to have all of that and more of that and i think when it doesn't have a refers to take a look at the mainstream media has decided to miss. it so there are a number of interesting developments we saw today that tell us just where our political system stance they paint a perfect picture i guess you could say for starters presidential candidate rick santorum decided to release not one or two or even three but four years of his tax returns that makes it all kind of hilarious is that despite the policies that they support republicans you know specifically tax policies or the way that they view social programs republicans are still trying to play this game where they use populist rhetoric to convince voters that hey they really care about you and so

rick santorum is doing his best to point out the differences between mitt romney and himself so santorum is the every man with a working class background who's not just some washington insider rick santorum has released four years of his tax returns and she said. and seven it was six hundred sixty eight thousand dollars as high as one point one million in two thousand and nine when you compare it to the gingrich tax returns or the romney tax returns frankly there's no comparison last month mitt romney released their two thousand and ten returns they made a lot more money that year it was a little over twenty one million but their tax rate was much lower just last night to make the contras clear themself and mitt romney santorum released four years of tax returns from two thousand and seven through two thousand and ten he earned more than three and a half million dollars over that time in two thousand and ten the last year they filed their effective tax rate was over twenty eight percent that's compared to the thirteen point nine percent tax rate that romney made a lot more money twenty times of what he did pay that same year the difference of course much of the romney money on investments much of the santorum money on income

. right so you get a sense the irony here rick santorum wants to convince voters that he's the every man by comparing himself to mitt romney which i guess in comparison to god is worth hundreds of millions of dollars worth a guy versus a guy that who's just makes a little bit over a million each year i think that you might have a little bit of a point but at a time when real unemployment is about fifteen percent at a time when millions of americans are underwater and can't afford to pay for their homes the idea of a candidate who is still a millionaire telling people that he's just like them so ironic but does it really make a whole lot of sense now does it and the sad thing is that the media doesn't really even seem to catch on i mean sure maybe chuck todd made some allusion to it quickly but that he decided to move on and that's because they've come to expect politicians these days to be rich don't forget the last year the center for responsive politics put out a report that showed that nearly half of congress is worth more than one million dollars now some of them are super rich to write like who's at the very top of this

list his estimated worth is up to seven hundred million dollars but forget about dare i say the fact is that the mainstream media like all of this is totally normal for our political class to be made up of only a certain economic class now they say that this is just the way the washington works and then they move on and we can see some of this in the way they reported developments on the payroll tax today too. marshall negotiators have agreed on one hundred fifty billion dollars plan that extends a payroll tax holiday unemployment benefits a bill to keep your money in your paycheck it is a done deal lawmakers have resolved all the differences on extending the payroll tax cut more makers are ready to walk an extension of the payroll tax cut for one hundred sixty million americans through two thousand and twelve impose a little after midnight that lawmakers came out of that tough day of negotiations to announce the payroll tax cut in venice extended lawmakers reaching a deal to extend the payroll tax cut that means that you'll keep more money out of your paycheck a big victory you could say for president obama and also

a big victory for tigris they work together they got something done just two weeks in a row now they did the stock act last week it's an amazing thing republicans and democrats coming to a conclusion that they both find agreeable a trend of bipartisanship common in washington you know if you see the rest of the year so it's a good look you can always can. i just love the luke russert fides it's so funny that this is the only thing that congress is going to get done for the rest of the year until the elections because it's funny isn't it right that these people have been elected to represent us at their salaries are paid by us the taxpayers and yet they choose to sit around take moral stand because they can afford to and waste everyone's time and not get anything done and then you wonder why discontent with washington and disapproval of congress are at all time highs these guys don't care right they're getting rich even if they don't pass any legislation and rick santorum is perfect prove that the cash in after you serve after you've made

connections and then you can be hired as a lobbyist or a consultant as newt gingrich likes to call it and the mainstream media well they just keep reporting on all of it like it's business as usual and see if that attitude doesn't change the not much else well for now they're still saying it every day every day they are choosing to miss. are now if you listen to the media or lawmakers as well as a range of so-called cyber security experts out there cyber threats are one of the most pressing issues of the time and they must be tackled. that the next pearl harbor that we confront could very well be a cyber attack that cripples our power systems certainly our grid the british government has learned the saddam hussein recently sought significant quantities of uranium from africa. not only from a few extremists in suicide vests but from

a few keystrokes on the computer. now what we also hear about of the possibilities of mass casualties chaos of the computer systems of power plants or other essential parts of our infrastructure and life sustaining services are protected from hackers and of course about the possibility that i cannot make damage national security being put at risk if the networks of defense and intelligence agencies are compromised the really scary world of scary possibilities out there and congress is ready to counter it with over fifty cybersecurity bills introduced just in this congress will session but is this threat being overblown are we conflating different threats all into one gigantic apocalyptic scenario just to line the pockets of defense contractors and create a massive cyber security complex talk about how to bring logic back into the sky before it goes a little too far here to discuss that with us as jerry britto senior research fellow at the market a center at george mason university thanks so much for joining us tonight gerri all right so you wrote an interesting piece about this too because you compared it to the buildup to the war in iraq and you asked if cyber warfare is the new yellowcake

so explain that a little further for us well in the run up to the iraq war the ministration made certain claims that we later found out were not substantiated and at the time that they were making them at least some of the claims they themselves had reason to know that they weren't so essentially that the media actually repeated these claims without really providing any sort of check on it and what ended up happening in many cases is that the administration would leak. to the media the media would report this and the government would cite the media as evidence to go to war and we've seen something very similar happen when it comes to to cyber. you're right so we've seen. i think it's really interesting you bring the media into this too right because i blame the media every day for doing something wrong and lately especially blaming them for ginning up you know this war this drug beating of war to iran perhaps they don't always give two sides of every story and have we seen the exact same thing here with cyber security in terms of lawmakers that actually quoting the

media when they're trying to push some kind of legislation in a hearing this is vicious cycle absolutely i mean it's hard to blame them completely for this because in many cases what they claim is that a lot of the evidence that they have for these dire warnings is classified and they can't talk about it but of course and they link it to the media and the sites of the media but. i would like to see the media least try to push back a little bit and say hey. we're not just here to report what we're told we should try to find some birth occasion some secondary sources to verify these all right so let's talk about this idea he also write about you is that maybe we're just conflating two many things into one gigantic bubble of cyber warfare or cyber security you know if you had it your way or i guess if we looked at this properly how should these things be broken down how many different categories are there so i think the first of the say is that there is a cyber threat right we shouldn't yourselves about

a lot of folks out there who want to do us harm and they use the internet and computer networks to do that but what happens is that when members of congress for example talk about cyber security they will say you know hackers have the ability to plunge us into darkness have planes crash into each other to rail trains etc and then when they talk about what the evidence is for that they'll point to to distribute the service attacks on websites such as taking down a website or they will point to rescue knowledge which is a very big problem cyber espionage against some of our fortune five hundred companies stealing intellectual property very very serious but these are all supped . things that we should disentangle them and treat them each supper as one of those things where you know we did a lot of coverage on this program as well about the debate over sopa and pipa and one of the things you just keep wondering is are these people necessarily qualified to be legislating on complicated technological issues whereas some of them don't

really understand how the internet works all that well so would you say that cyber threats are similar category in that sense i mean i can't blame members of congress because after all they are generalists who are elected by people to legislate on a huge number of issues and so this is why they have to depend on experts but what you do have to think about though is where they are want to be sort of willingly ignorant sometimes and you mean there are a lot of folks who stand to benefit from comprehensive cybersecurity legislation especially if that legislation comes to touch with big spending and so i'm more concerned about that than about their ignorance i'm sure they could be educated if they wanted to be but i guess you could also say they can be easily swayed if there's a lot of money involved right so if we have this massive cybersecurity complex that's starting to this huge industry is starting to be just how money isn't it right now how much money is in it right now how big would you say this industry is now i don't have clear proof or you know i don't want to billions of dollars there still are we still in the millions range probably reaching the bill if the pens how

do you how big you want to look at records there is of course protecting federal systems right the military. there is the defense spending on cyber security but then there's also the larger cyber security. complex around security in all networks in the country all right so how would you suggest then that we properly approach this rather than just hearing that cyber warfare is the next frontier well i think the first thing you have to identify is where there's a market for here and what that means is very simply this most of the networks that government is seeking to protect are privately don't and so you think to yourself well these networks are owned by somebody that somebody doesn't want to lose or investment. so why aren't they protecting their own networks we have to make sure that these there's some sort of market failure here that's happening once you have retained then you can absolutely show that's the case what tools are available to us is that the government telling us exactly how to protect these networks that have certain drawbacks because that will stifle innovation we're told one way to do it and check off that box to hackers find out that way that's not

a situation to be in i would maybe seek some other ways to do it so for example transparency right have companies that are breached have to disclose that they've been breached what does this do with informs the market so that markets can your consumers can decide where they want to do business with if you're somebody who has breached often well you're going to be punished in the market and if you don't have customers access your utility customers really have a choice of wording to go to the insurance market might go take care of it partially transparency is one of the things that we're fighting for and rarely seem to get and so this is the first thing we're talking about you that's looks like a specific cybersecurity bill that's actually moving its way through congress right now right you have a lot of companies fighting back because they're forcing them mandating them picking and choosing which companies out there need to have a stronger i guess you could say you know network protection out there so we've come a long way i've been looking at this issue for over

a year and in the in that time span we've gone from cyber security bills that were very prescriptive and told companies exactly what they needed to do and they even would require licensing of cyber security professionals to really bad idea would move to a place now we're both the house and senate are looking at comprehensive bills that are much more limited and they're limiting themselves to only dealing with critical infrastructure that's a stop in the right direction i think all right thanks so much for joining us tonight i'm sure this is something that we're going to be hearing a lot about but i think it's always good to approach things with you know a little bit less alarm and sit back and relax and think about it for and i think that's peter thank you. gary. that was terry done for a quick break before we were turned one of our the occupy movement has sent in the papers to form a super pac so as a sign of whether it's headed or a sign that individuals will do with occupy what they like and it's the black budget the billions of dollars the pentagon puts aside the programs that you'll never know about going to dive into this shadowy world and.

well. it's technology innovations all the latest developments around russia we've got the future covered. wealthy british style it's a time to write let's go. to. market why not. find out what's really happening to the global economy cars report on our. well let's talk about facebook because they're all about protecting your privacy right well at least that's what they keep trying to tell us. i mean privacy is a really important issue for us and for the internet so we spend a lot of time thinking about these things in terms of the settings that we have i

think there are some misperceptions. unfortunately for us that's just not true when you actually dive into facebook sprecher on privacy you realize that they really could care less about it and mistake after mistake of theirs really shows that in two thousand and nine the f.t.c. started investigating facebook after several of their most egregious lies to their users were exposed now it was a freaking free for all over there facebook promised users they would keep their private info private well guess what that was a lie facebook or randomly change settings to made that made private info like friend list public with no warning facebook almost also promised its users that they wouldn't share their info with third party apps why third party apps were given free rein to access users personal information facebook also promised that they would delete information once a user cancel their account or to leave the information law.