filmmakers. and. the rector's cause of real life in prison on charges. of the. top stories this hour on r.t. serious as all attempts to al's the regime of failed even as a u.s. led program position a group of nations meet with the aim of aiding the rebels course to. beijing levels criticism of washington over its sanctions against countries that keep the oil from iran and u.s. wants to start to run of income an attempt to make it about its nuclear program. and cities across the globe switch off the lights for earth to do their bit for the environment moscow is among those plunged into darkness. so next to lauren is still upset whether some of america's richest really mean it when they say they're ready to pay more tax to help the ailing economy capital accounts is up next here on our

team. good afternoon and welcome to capital account i'm laurin the store here in washington d.c. vizier has lines for march thirtieth two thousand and twelve we have heard billionaire investor warren buffett make of this case about taxes in the us. we should we should raise our desire everybody except the very rich are they which are very short of the rich when you look at the facts is this really about buffett wanting to be taxed more or is this about crony capitalism and his place in the pecking order we'll talk about what we can learn from it what it symbolizes and who this may have backed 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 is a way to benefit from reading the ball these central planners is ben bernanke for

example a contrarian indicator will discuss meanwhile this week new page filler numbers told us us howling not so good at least in the sense that our home prices drop back to levels last seen in two thousand and three but is housing actually way worse i could that be a good thing let's get to today's capital account. so we've heard billionaire investor warren buffett saying the rich should be taxed more that he should be taxed more he's made the 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 research papers were torturing and i have no tax planning i don't have i don't have a accountant i don't have shoulders 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 that's so gripping right now let's look back 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 broad 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 squandered will 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 buffett was not worrying about the 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 face the storm in washington obviously but i would i would so they're pretty close to a plate truck to follow like a question just like you always have the honor of being those those things are good just to put this right and listen to him talking about what made him think this

plan would work. well you have a certain target for treatment. i mean he is using the. publisher of the church as a job for the work. 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 ok 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 up 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 indie 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 in the u.s. 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 how so. no 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 he but his share of berkshire's after tax income was about three billion dollars so he's not paying personal tax on that three million 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 this is not selling any shares of richer half the way so be a little like me sitting here saying hey you know here's an idea for taxpayers 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 and i was ferrari so it doesn't affect me whatsoever but it is in the same role if you wanted to really advocate some kind of tax fairness he would advocate the kinds of taxes that you know would affect him things like estate tax things

like minimizing adoptions for charitable contributions and that kind of stuff and i could be wrong i'm not in favor of any of that i'm 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 go this one step further cupid you mentioned those exclusions then if the guy who is that 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 the when he gifted 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 then the last to pay taxes and so it's not it's not really a matter of you know gee you know warren is crazy to say the stuff that thing that's that's troubling about it is that is the manner in which it is it which he presents it. after he's already accumulated billions of dollars there's this. is fairly gosh i wish i wish i had thought of this earlier you know i thought of that when i was this the i could have paid billions of dollars that i could tell my rich friends the people his dollars and 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 at what gets taxed and personal income and what percentage of his income is . the way if we could 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 of 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 always 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 and you can you can see it 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 and when he made investments in goldman sachs and g.e.

that were literally on the fly and let me know 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 loud bridge there was no way to know what was inside actually inside of a goldman sachs balance sheet or lehman brothers balance sheet or a bear stearns balance sheet what you knew is that they were heavily leveraged and and that they were leveraged to assets that were 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 gaming it you know our heat up in yeah there where you think he was making a bet on crony capitalism he was betting that hank paulson at the treasury would be able to bail out of by anything called in fact 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 question that would follow would be warren buffett thinks these stocks are cheap enough i'm just going to buy them at the time you to remember berkshire hathaway 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 market market basis and he was berkshire i think was in. a not come full spot 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 who also happened on

berkshire hathaway you know junk shock would also have his back and so you're saying that for example when we saw all of this aig get poured into these banks they berkshire hathaway had a stake in can get to know a lot of federal aid verses in target and federal law from the fed federal reserve kind of loan facilities all these different things we can bring out for example how crony capitalism back to 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. 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 and this 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 you know if you're a million marcos you can have ten thousand she is going to have twenty you know you don't know until you're until you're her so with buffet it's kind of same thing and 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. again currying favor and trying to make sure that the policy favors his companies right as opposed to just doing their diligence and investing the old fashioned way so the question becomes where does that leave the rest about and i want you to help us try to answer that after the break we're going to go to break shortly but when we come back we will have more with eric frye editor of the daily reckoning and still ahead you commented now will respond we're going to have your pain back i had but first your closing market numbers.

something to tell you what is happening on the streets no is there you know it's up to forty three very wild cards of the dow however i totally disagree i don't think the parts you got. we're still waiting for the actual resolution to have.

it was all right welcome back before the break we were talking about political entrepreneurism ok the new core of entrepreneurism that someone like warren buffett embodies ok you're not bad not what is this company or that going to do you're bent on where can i get in that 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 countless 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. dealing with a crony capitalist bunch so back in two thousand and five ben bernanke he was asked about housing and it went like this what is the worst case scenario if in fact we were to see prices come down substantially across the country i guess sort of

bargain firmus it's a pretty unlikely possibility of we've never had a decline in house prices when a nation where nationwide basis wow so how wrong he was and now you have bernanke he's 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 tweak ben bernanke used nose and i mean it was a that's a perfect perfect bad call and 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 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 level and that would include things like gold silver houses farmland etcetera things that are that still tend to trade on values that cannot be manipulated by by government or were 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 just don't know about the stock market anymore it's very difficult to invest in policy it's very meaning it's difficult to invest in in an environment in which the fundamentals are so influenced by government with elation yeah but the same time

a lobbyist people are saying hey i really really like. gold i really really like houses and you have people like john paulson david when. you can source even buffett actually about houses. a lot of 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 them for name contrary and jack's eric maybe that's next the wii's the guy that aside i want to go more into housing you have been writing about it you mentioned it 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 they're 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 out of that i would start by saying i have i have no crystal ball i mean maybe the housing market falls from a decade i really have no idea what but what but what i think appealing 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 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 in 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. 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 friendly to hard assets like gold buffett in his most recent annual statement annual letter said that exact thing it with respect to houses that you are in an environment where the dollars and lose value and you want things to protect to protect your wealth and he would buy two hundred thousand houses if he could. curiously he has no interest in gold. but he sees the same the same picture in a lot of people to two i like air 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 a reverse bet on the bond market and also a bad against inflation and 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 fry editor of the daily reckoning. like you. are right before we go let me respond to you because it's been a while since we've done if your feedback now we have a chance ok we cannot the we're 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 call you guys love you're ok straight shooter honest expert in the financial markets the problem is the bad system is controlled by power greed guns in

assassins who will eliminate 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 use the opportunity she was hyperbole here to try to make a broader point take a listen. our system is built through word cheaters why we put people out to cheat we should be encouraged to see as much as no no which is no way to get ahead in america anymore ok to rob and steal. now serve our viewers help point out another angle on this which i should fire back if you need three but we were seven for six that i heard bernanke he got fifty nine he had a 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'd be mad 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 being people an entire country beyond that you and be rewarded handsomely by society on that note after all of this i caught a story from my colleague anastasio 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 commuted the mass of securities fraud during the 1980's investors out of florida hundred million dollars and requires twenty five hundred people to be unemployed so i'm part of the part of the system. that i got yes i feel good that i got caught. i feel bad that i got caught ok you can 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 caught 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 did brief us 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 off is 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 massive monetization of debt that we've seen i don't know about you

go ok i'm not going to wait until better days are maybe ahead based on some ideological ideal that may never come in reality my goal is yes to be critical of problems but also to educate myself and our viewers on 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 meow z i k l v r views it here and they 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 looked like. i know what i'm talking about i mean this is

a lot of stuff to take care of her my cuba and on a fun endnote 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 bear he is a very attentive viewer who said that's easy at the end that first hearing and in case you missed it it's pretty amusing so take a look. i'm a vice consul i respect sleazy current scams are based on constitutional. very smart. everywhere in our show even though he was good in our show and i'm really impressed are gets caught it and that's where all of you on that happy note because that is our show thank you so much for tuning in do not forget to follow me on twitter lauren lyster and give us feedback on the show at youtube dot com slash capital account has clearly read it and we were sponsor some of it to you and be sure to tune in next week we are scheduled to have among our great lineup marc

fogger who is the attorney there and always entertaining to do and from everyone here accomplished so much for watching and have a great night.