and for us here that's going to do it but for more of the stories we covered go to youtube dot com slash r t america second our web site r t dot com slash usa and you can follow me of course on twitter you can find me at christine for zob. well see british sign on the sun. sometimes it's because i'm going to go. to. market find out. why no one's really happening to the global economy with my stronger for a no holds barred look at the global financial headlines tune in to congress report .

is. good afternoon and welcome to capital account i'm laurin the star here in washington d.c. these are your headlines for march thirtieth two thousand and twelve we have heard billionaire investor warren buffett make a vis case about taxes in the u.s. . we should one short cut or a shark his army buddy except the very rich i think we should protect the rich but when you look at the facts it isn't really about buffett wanting to be taxed more or is this about crony capitalism and his place in the packing order we'll talk

about what we can learn from it what it symbolizes and who this may affect meanwhile the eurozone has boosted its rescue funds finance ministers agreed to increase their fiscal bailout system by forty percent to seven hundred billion euro we ask if there. the way to benefit from reading up all these have central planners is ben bernanke for example a contrarian indicator will discuss meanwhile this week's new case shiller numbers told us u.s. hourly not so good at least in a sense that average home price drop back to levels last seen in two thousand and three but is housing our actually way worse i could that be a good thing let's get to today's outlook and.

so we've heard billionaire investor warren buffett saying the rich should be talents to more that he should be taxed more he's made that case very publicly and with much fanfare that he pays seventeen percent a little more than that in taxes a lower tax rate than his secretary and not only that. there wasn't anybody in the office for the reception the song played as well as hard for it and i have no tax planning i don't have it i don't have an account and i don't have tax shelters i just follow what the u.s. congress told me to do. sounds impressive sounds noble that message has really traveled but our guest today asked if we should slap a warning label on each one of buffett's public pronouncements as well before we get into the matter at hand the one day it's so gripping right now let's look at a little history ok back in two thousand and three for example buffett was warning about the value of the dollar the nation's debt what he said was the u.s.

exports its net worth abroad he wrote an article warning in fact that america's growing trade deficit is selling the nation out from under us he made his point with a story of the islands of squander ville and thrift ville not hard to figure out which one was the us if you don't remember this piece and he wrote that sooner or later this wonder of real government facing ever greater payments to service debt would decide to embrace highly inflationary policies that is issue more squander bucks to dilute the value of each big morning there but fast forward to the two thousand a financial crisis and government was not worrying about the debt increasing bailouts of the financial system he was in fact advocating for them here he is pushing tarp ok the treasury's plan which hank paulson was pushing this was before it was passed by congress and signed into law by bush but after it had failed in the house the first time warren seemed

a little flustered during those free market hours take a listen say for sure that washington is there but i would i would so they're pretty close to a plate truck. driver it was. one of those those that you know good posters of this . and listen to him talking about what made him think this plan would work i believe you have a better sort of the treasury the right there i mean is he there at the wrong time should take the job for the car. they're all just buddies now not only that everything you just heard there but what also happened before tarp was passed buffett invested five billion dollars to save goldman sachs k that was announced in september of two thousand and eight and then he's out there advocating a bailout for the banks after it fails the first time a bailout of banks he now has a stake in and it was more than just goldman sachs after warning about valuing the dollar and racking of deficits ok so now we have some context now let's talk about

what warren buffett may really be trying to achieve with his public proclamations about who should pay higher taxes and more importantly probably how this symbolizes the direction that capitalism in the us has taken and where we are today to help us put all these pieces together eric frye is here he's editor of the daily reckoning he's joins us in l.a. and he has been writing about this so first eric thanks so much for being on the show today it's a pleasure to be here thanks for likewise for me it's always nice to talk to you now buffett is of course an example of someone who really epitomizes where we are in what you call not only a crony capitalism phase in the u.s. but a post capitalism phase and do us so before we get into all of that let's build this case for buffett because you've done a pretty good job because buffett has really become the poster boy for taxing the rich for paying his fair share along with his rich friends but let's look at how

what he has advocated for would actually affect him when it comes to paying higher personal taxes because you argue that it wouldn't really so so how. we know it would make very little impact because he he advocates for the very taxes that he himself doesn't pay or that he pays a very small portion of so if you look at the two thousand and ten tax year he made roughly forty million dollars in direct personal income but it but his share of berkshire's after tax income was about three billion dollars so he's not paying personal tax on that three billion he's paying personal tax on the forty million and he wants to raise taxes on the personal income and you must raise taxes on dividends which purchase and pay and he wants to raise taxes on capital gains which he himself is not paying because it's not selling the shares approach has the way so be a little like me sitting here saying hey you know here's an idea for taxed and it's let's let's tax things that rich people use let's tax golf clubs yachts. you

know and ferrari's ok well great i don't play golf i don't have a yacht now ferrari so it doesn't affect me whatsoever but if it is in the same role if you wanted to really advocate some kind of touch fairness he would advocate the kinds of taxes that you know would affect him things like estate tax things like minimizing duction for charitable contributions and i kind of stuff and look at me wrong i'm not in favor of any of that i'm just saying that you know to go out and say hey let's let's let's put these taxes on certain people tax i'm not paying is disingenuous yeah and let's kill this one step further q could you imagine those explosions then this is the guy who has been out saying hey you know that tax deduction for corporate jets is important you should not touch that and you also get a good example of how really there is evidence that he doesn't want to pay more taxes or else why would he have kind of stipulations on money such as the monies given to

the gates foundation can you talk a little bit about that. ride in it when he when he if the billions of dollars to the bill and melinda gates foundation in two thousand and six this is a. a series of gifts and one of the stipulations was that the foundation maintain its tax free status so that nothing that he gives that foundation could ever be taxed. you know nothing wrong with that and the loss of the taxes and so it's not it's not really a matter of you know gee you know warren is crazy to say this stuff but then that's that's troubling about it is that is the manner in which it is which he presents it you know after he's already accumulated billions of dollars there's this shock to you is golly gosh i wish i wish i had thought of this earlier you know if i thought of that when i was this the i could have paid billions of dollars that i could tell my rich friends that the billions of dollars are darn it you know i just didn't think of it yet that's the problem is that it's dishonest yeah quite

a smart guy to all of a sudden realize this i just want to throw for our viewers to see the difference between now what gets taxed and personal income and what percentage of his income is from berkshire hathaway if we can throw that up for our viewers what we're talking eric so that they can really say what tax see what tax fairness buffet style is the way that you point it out so now the question becomes we've built this great case showing how really buffett doesn't want to be taxed more. and for all of those reasons you gave so then the question erick why has he become the crusader on this cause what's in it for him. well i i think he is correctly understanding that the game has changed a bit in united states that it is more important for somebody with his cock all with somebody somebody with the investments that he has to be what's called a political entrepreneur as opposed to a traditional investor it's more important to cultivate connections with political

power than it is to identify the next winning opportunity and you can you can see if you get the evidence speaks for itself look at the kinds of investments that buffett made early his career versus the investments that he made most recently and when he made investments in goldman sachs and g.e. that were literally on the fly i mean no due diligence and and i i know firsthand we look at these balance sheets these banks in zero seven zero eight they they were extremely opaque they were extremely leveraged there was no way to know what was inside actually inside of a goldman sachs balance sheet or lehman brothers balance sheet or a barrister and balance sheet what you knew is that they were heavily leveraged and and that they were leveraged to assets that that were what are called level to level three opaque not priced in any normal way and so for a guy like buffett to just stroll in there and drop down five billion dollars

that's that's not investing that's that's a gaming it you know are you see that in yeah there where you think he was making a bet on crony capitalism and he was betting that hank paulson and the treasury would be able to bail out of body that moment facts for example. well the five billion dollars when i remember when he made that investment my reaction to it was ok we're all we're in a kind of freefall already people know that but he knows that people follow what he does and he knew that the press that would follow would be warren buffett thinks these stocks are cheap enough i'm a step in and buy them at the time you three member berkshire hathaway was was not only long or owning tons and tons of financial stocks that were in freefall but he also was short put options on the emerging market indices meaning that as these markets fell he was losing lots and lots of money on a mark to market basis and he was berkshire i think was in. i'm not confident stock

so the whole idea behind tossing money into goldman sachs was was basically a signal that you know he thinks it's ok but also that he knew he knew that. hank paulson would have his back and other members of congress to us what happened on berkshire hathaway you know shock shock would also have his back and so you're saying for example when we saw all of this aid get poured into these banks they berkshire hathaway had a stake in to tune out a lot of federal aid purses in tarp and federal law from the fed federal reserve kind of loan facilities all these different things we can bring up for example how crony capitalism pac and wells fargo with all that money going and you're saying hey that's not a coincidence that's where we are today and capitalism. and that's exactly correct that warren buffett had a direct role in in shaping policy both in conversations with

the house leadership in zero eight and with hank paulson directly and with and later with president obama and timothy geithner he has had a direct role in shaping policies that funneled billions of dollars to his companies. you know what i have done the same thing in his position probably i don't know i mean it isn't about who's more moral who's less moral who's more hypocrite i mean you never know what you will do if you're in that same position. if you're a member marcos you can have ten thousand shoes are going to have twenty you know yeah i don't know until you're until you're her with buffett it's kind of same thing we don't know what we would do in his position it's only but it is illustrative that this capitalist is now spending his time. i don't current in favor and trying to make sure that the policy favors his companies right as opposed

to just doing legends and investing the old fashioned way so the question becomes where does that leave the rest of us and i want you to help us try to answer that after the break we're going to go to break startling but when we come back we will have more with eric frye editor of the daily reckoning and still ahead you commented now we'll respond we'll get to your pain back i had but first your closing market numbers. you just put a picture of me when i was like nine years old and just tell the truth. i confess and i am a total ghetto i love driving is a killer and. he was kind of the jester but.

i'm very proud of the role that i'll just you know it's played. you know sometimes to see the story and seeing so you think you understand it and then you jump something else here's some other part of it and realize that everything is ok and you don't i'm sorry welcome to the big show. what drives the world the fear mongering used by politicians who makes decisions to break through that sort of way. can you trust no one who is soon to you with a global reach where are we heading state controlled capitals school

sessions when nobody dares to ask we do our t.v. question more. all right welcome back before the break we were talking about political entrepreneurism ok the new form of entrepreneurism that someone like warren buffett embodies ok you're not that not what is this company or that going to do your best non where can i get in it i know that the government's going to bail out and this will be a good investment for me because i'm tied into them ok this whole new crony capitalist world so what if you're not a crony capitalist what do you do well our guest in his latest writing to us was saying hey you know take the other side of those trades is one way he's going to tell us more but first let's look at how this would work with you know dealing with the punch so back in two thousand and five ben bernanke he was asked about housing

it went like this what is the worst case scenario if in fact we were to see prices come down substantially across the country but you're sort of are your permits it's a pretty unlikely possibility of we've never had a client house prices on a nationwide nationwide basis wow so how wrong he was and now you have bernanke you saying housing may no longer be to secure investment it once was so what is the takeaway here eric cry out of her of the daily reckoning maybe able to help us read the tea leaves so erick what is the takeaway from someone like ben bernanke in his statements is there anything we can gain from this. well there's a couple takeaways the first is that it's it's always funny to tweet ben bernanke he's knows and i think that was a that's a perfect perfect bad call if you don't get those very often so it's kind of funny that way but the main takeaway that i think and it relates to profit i think most

investors are left with a kind of binary choice you you either recognize that big parts of the financial markets are are are kind of unfair and rigged. big parts not all of it but big parts or you go to places where where the playing field is a little more logical and that would include things like gold silver houses farmland et cetera things that are good that still tend to trade on values that cannot be manipulated by by government or some sort of crony involvement so something that's been fascinating in the last in the last few months i've talked to a lot of a lot of you know successful investors names that you would that you would recognize many of them and almost universally they have said something like. you know i i just don't know about the stock market anymore it's very difficult to

invest in policy it's very meaning is difficult to invest in in an environment in which fundamentals are so influenced by by government manipulation yeah but the same time a lot of these people are saying hey i really really like. gold i really really like houses and you have people like john paulson david. even soros even buffett actually about houses going around saying i want to buy houses and these are smart guys so i think i would i would tend to side with them as opposed to mr bernanke you maybe will end up with the burning the contrary and act erick maybe that's next the be three i that aside i want to go more into housing in writing about it you mentioned just now we just got numbers out earlier this week from case shiller showing that housing prices if we can bring them up are back to two thousand and three levels so this was just the

news that we got out earlier this week but then you show that when you look at median home price in terms of per capita disposable income it's actually much worse than we can bring up those numbers too because we have a chart from you eric and it shows that there are lower than they have been in forty years if we could bring that up eric tells us what is the opportunity here. right well i mean obviously i would start by saying i have i have no crystal ball i mean maybe the housing market falls from the deck and i really have no idea what but what about what i compelling about the housing market is that it is cheap . both in relative terms relative to recent nominal pricing and also in terms of of what it what it would cost an actual person to buy meaning in terms of disposable personal income and also very very importantly in terms of the what's the monthly payment you know mortgage rates down here at four percent mean that

your your monthly payment as a percentage of your income is going to be extremely low and if you look at it on that basis. you know home prices haven't been this cheap in in forty years so. i think that's compelling and at the same time you have a guy like ben bernanke he. you know still printing money yeah and still running a very loose monetary policy and traditionally that kind of monetary policy has been friendly to hard assets like houses from me to hard assets like gold buffett in his most recent annual statement annual letter said that exact thing with respect to houses that you are in an environment where dollars and lose value and you want things to protect to protect your wealth and he would like to have thousand houses that he could. curiously he has no interest in gold but but he sees the same the same picture

a lot of people do too i like eric because he's hedging between crony capitalism and also to some of the plus side of that that you're looking at i also thought it was interesting that you said that this was the reverse that on the bond market and also a. began to inflation i really appreciate you being on the show and helping us navigate this crony capitalist world which we can both criticize but also need to figure out how the heck to navigate that with eric cry at it or of the daily reckoning. thank you. all right before we go let me respond to you because it's been a while since we've done of your feedback now we have a chance ok we can talk the week talking fraud and corruption with derivatives expert janet have a kohli and r.v.

roller responded echoing what many people said which was that our country needs people like janet to have a quality you guys love you're ok straight shooter on this expert in the financial markets the problem is the bad system is controlled by power greed guns in assassins who will limit the good people so it's really up to people to take control of their future once again which brings me to a debate we got into in loose change over what this is to her words and how that applies to kids who cheat on their s.a.t.'s now dimitri used the opportunity to use hyperbole here to try to make a broader point take a listen. the entire system is built to reward cheaters who are we call people out to cheat we should be encouraging. is much no no no no we use it in a way to get ahead in america in more ok to rob and steal. now a third of our viewers help point out another angle on this which i should fire back at dimitri but we were seven for six that i heard about fifteen ninety out of

sixteen hundred on his s.a.t.'s which is obviously a very good score according to time magazine it's also true and you the mandela well said so what does that mean having a fifteen nineteen means you can't be a good one thing there we have a big aha good reminder that you can play by the rules be a high achiever in the traditional sense ok do well on your s.a.t.'s presumably the honest way because you're smart in the traditional way and still end up being considered by some to be wrong again people and entire country beyond that too and be rewarded handsomely by society on that note after all of this i caught a story from my colleague anastasio churkin ok with some of the most priceless evidence in the form of a sound bite of the uphill battle we face here take a listen i committed a massive securities fraud during the 1980's fleeced investors out of five hundred

million dollars and we cause twenty five hundred people to be on the employ so i'm part of the big part of the system. that i got yes i feel good that i got caught. i feel bad that i got caught ok you cannot get better than that now to talk about how to save yourself from all of this despite the bad guys seeming to continue to win and not feel bad about what they did only bad that they got because we had chris mayer on to tell us about the investment opportunities that he found travelling all over the world ok he came back he has a new book d.j. alley it's been said laura and i understand you're trying to help us common folk by bringing this guy on to talk about future investments but just to step back for a minute and think about it these are all the things that got us into this mess in the first place until there are complete open markets it's just going to go around and around over and over it's all based on this old world pyramid scheme better days are ahead when it's all gone now to our viewer i'm assuming you're referring

to some of the issues that we talk about a lot with currencies fractional reserve lending central bank setting of interest rates and the math that. of debt that we've seen i don't know how you go ok i'm not going to wait until better days are ahead based on some ideological ideal that may never come in reality my goal is yet to be critical of problems but also to educate myself and our viewers and how to deal with the current reality in the best possible way it doesn't really matter you can criticize all you want but if you're not figuring out how to deal with real life what does it matter and speaking of reality here's how me yeah the i k l v r views it. said do you realize that dimitri and shannon are the producers of the show which means they actually produce the material for lauren to deliver and to that i just wanted to remind all of our viewers that you know i kind of resent it because it is really

hard work it takes a lot of time to get my hair ready get my makeup on practice reading the prompter and look like i know. well what i'm talking about i mean this is a whole lot of stuff to take care of my kid that and i'm a fun i know i tweeted wednesday to see if our viewers could spot a guest cameo in our show and right away i got to hand it to red bull there he is a very attentive viewer who said mark maleng bad the z. at the end never has hearing and in case you missed it it's pretty amusing so take a look. i mean vice consul actually the current stamps are based on a constitutional right. very smart knew that everywhere and it was in our show even though he wasn't in our show and i'm really impressed are gets caught it and that's where all of you are not happy because that is our job thank you so much for

tuning in do not forget the follow me on twitter at lauren lyster and give us feedback on the show at youtube dot com slash capital account because clearly we read it and we respond to some of it to you and be sure to tune in next week we are scheduled to have among our great lineup mark fogger who is the attorney bare and always entertaining to and from everyone here at capital account thanks so much for watching and have a great night. you know sometimes you see a story and six so. you think you understand it and then you did something else here's the part of it and realize that everything you saw you don't. charge because of the detroit. free. when you take three. quarters.