abuse prostitutes the hungry duck closed in two thousand and nine after years of problems with the all four were to use these stories are going to do nothing to calm down the scandal swirling around the u.s. secret service all right well for this hour we're going to do it we will be back here in a half hour for our final newscast of this week i'm christine. there hasn't been anything yet on t.v. . it is to get the maximum political impact. the food source material is what helps keep journalism honest we. we want to present. something else.

good afternoon and welcome to capital account i'm lauren lyster here in washington d.c. these are your headlines twenty seven two thousand and twelve you've probably seen the accusations that wal-mart paid millions of dollars in bribes to public officials in mexico to do business there now mexico's attorney general is reportedly investigating but is it possible in this case that the largest retailer in the world this multinational corporation is really the victim of extortion jeffrey tucker will make this case and more than twenty senators advocating the volcker rule sent a letter to write elaters this week urging them to get the role done by this summer as they were supposed to despite fears were thwarted industry opposition also trying to lobby against the big banks desires members of occupy the s.t.c. we caught up with them for an update and beware the dangers of lawnmowers.

thanks. i'll tell you what the federal government has done to crack down on this dangerous machine and let's just say when it comes to regulations the grass is always greener on the other side let's get to today's capitol like out. i love it everyone's laughing at the lawn more but this is serious stuff ok on this show we spend a great deal of time condemning central banks and governments for their manipulation of the markets we review the too big to fail banks for their outwardly criminal behavior and anti-competitive practices and we hate their executives for

condoning as much we appreciate true capitalism and we make no apologies for it but what about regulations that's a little bit more a sticky area the volcker rule for example attempts to regulate the financial sector and though it may not be perfect it certainly is and we've had plenty of critics who have said so and it may provide banks' loopholes to get around the actual rule it doesn't least attempt to put some restraints on the too big to fail banks that have gone buck wild with our money however not all regulations are created equal some work better than others and some are more pernicious than others our next guest would probably side with the latter determination their regulations are by and far per knishes way to purchase to commerce and to the general welfare he has a very interesting examples including how government regulation has helped destroy your lawn he is jeffrey tucker executive editor of laws

a fair books and author of it's a jetsons world private miracles and public crimes well first let me just say geoffrey that it is so nice to see you again thank you for being on the show it's thank you so much for having me lauren it's really wonderful to be here and i hope you like steampunk to pick that up just for you i love the background this is the most artistic skype background in fact that i've ever seen in the history of this show's long six month run so far so jeffrey let's get into one of the biggest issues that that you've been writing about that is contrarian in the way that you so often are so this wal-mart story this is hampshire tons of had lines it's been everywhere let's just say you have a different perspective on. a story as you often do you say that wal-mart is actually the victim here of extortion how so well so it turns out that in mexico there are just like the united states there are little government officials little petty dictator is a position all throughout the economic law actually you know standing in the way of

progress down in the way of enterprise and they're willing to go out of the way provided you pay them the right amount of money now in the united states this is done through lobbying and special trips or probably titian's and setting up you know offices that sort of thing and putting regulators on your board and all the rest of it we have our own ways of paying our bureaucrats off right but in mexico they have much more efficient system you just have to put my sample of cash into the middle of these little tiny dust motes and then they go away what's wal-mart's been doing this for a very long time apparently and should more cheaply than it cost them the united states as. every government uses that i mean governments don't do anything for us except they just stand in the way it's wal-mart's trying to bring prosperity and beautiful products will do soko and they have done so but it costs a little bit of money you know so now they're being fried you know for just for trying to make people's lives better and get it get in the barriers and that's really what the real story is here ok so jeffrey let me i fear you comparing

a kind of this corrupt system in in mexico where you have to do bribes or you can opt to do bribery or in the u.s. system where there's kind of this. officially ok system of bribery through lobbying and campaign contributions and that's where i think i think both bad. well they are but i mean so long jeff governments are going to have this kind of stuff going on and what i find interesting is the other day the new york times wrote a big article praising google for having finally grown up and mature and stop thinking it could get by without playing the game and that pays them for having sent a ton lobbyist to washington and hired a bunch of you know federal regulators to be on there you have to be on their staff and all the rest and the york times is praising them for this well exactly is the cleaned up version of what we see in a slightly different form and mexico but it oh it happens of mexico that's terrible that's corrupt that's evil you know but you know what's interesting to me is why is wal-mart being black and why why people pointed to the little despotic bureaucrats

who are asking for the money and accepting it i mean i think there's a real problem i agree with you i mean but why is why is everybody playing what we're all over it wants to do is good business you know i mean that's that's a business does they want to get products to people that's all they're trying to do it and they've made that possible through the system of payola you know which i regret that wal-mart's had had to do but i mean we should be feeling deeply sorry for wal-mart which is the right of the right for them but i think wal-mart is doing just fine jeffrey hawking their plastic christmas trees and their cheap everyday low prices to people all around the world and pay their employees slave wages but that's a little bit of an overstatement but. when you say that corrupt government that you can buy your way around is far better than good government that blocks all progress just i you kind of touched on this but but it's expand on this notion well i mean the fact is that if every government regulation were actually enforced as written the whole world would come collapsing down with civilization or just collapse we've

got to find ways to get around these things in the united states they use lobbying pressure you know you ever and ever more people being wrapped up into this racket i mean we're all having to every day protests this protest this law these are passed this legislation that would destroy the internet that all stroy workers on farms were. ever right so we're all involved in this and a way to have begun government for our rights and our liberties it's a far more efficient system to just be able to put a little bit of cash and there and then met and then they go about their business i mean in a way corrupt government is better than good government in that sense i mean good government that actually effective in enforcing the rules and regulations that's a disaster. but you know every other day i totally get some of what you're saying and i applaud you for coming on and saying these amazingly colorful things that you do but isn't there an argument for some regulation ok for example with the too big to fail banks what's wrong with saying hey you can't proprietary trade with federal

and sheridan money isn't that a good thing well lauren you are in norman so the sophisticated are able to make these kind of careful distinctions there is a difference between regulating the financial sector and regulating the right of the physical world financial sector so long since the banks of their ability to create money out of thin air as much they want trillions and trillions you know then yeah there has to be some kind of controls on that ideally we'd have a gold standard so the system would regulate itself but in the physical world i can't tell that any regulations are doing anybody any good seems like there's just been a conspiracy to sort of record laws thank it after decade after decade and it seems like every day i come across new examples of this well with with a company that's as big as wal-mart which you could argue when companies get that big where they can get to a certain point that they crowd out competition isn't that a problem too and that's not the financial sector that's the big corporate sector. in a real market economy there are no barriers to entry of any legal sort and to the extent

that wal-mart's kind of competition is going to go and so because it's doing a good job of what it's doing the second it poulter's even slightly there's going to be others to rush in and take over and any you know c.e.o. of any corporation anybody who's had any experience in business life knows knows this profitability is. oh he's hanging by a thread and there are just you know shocks everywhere waiting to for you to mess up so they can just sweep down and take over that's the beautiful thing about about the market economy it's just this gigantic sort of. rivalry sports competition you know where everybody's like falling all over each other desperate for what to serve people i mean how beautiful the think utopia that's the beautiful that it's. making out of utopia and things that are getting in the way of yours can we talk about you a lot more jeffrey because you know the first thing that you would have you have had your salary you would have to or a lot more why you had to get all these things hey you know just the other day i

was in a hotel and i turned on the shower and the and the stuff is just like dripping out but i carry a tool now with me wherever i go so i pulled out the shower head and just like my little two it's a corkscrew and stuck it in there pop pop pop that little you know stop or the flows top row that put it back down i had a great start so yeah i love to hack things that's great the lawnmower is an interesting case because i struggled for ten years trying to figure out why my lawnmower as it were cheap but a lot more as when i was a kid you know really fat they were well they would eat anything like you could run over anything it would just suck it up and shoot them in the bag and there was never a grass left over not true anymore i've got like three lawn mowers and they're all been catastrophic and i thought you know something it's something strange is going on how come something you used to work doesn't work anymore right and so suddenly that i mean it took forever but i finally found it turns out the polar bear oh the consumer product safety commission but actually has the blueprint for how

lawnmowers have to be constructed i mean from the bar to how low the casing goes to at you know every aspect of the engineering thing and so it's all dictated by the government and that's why there's no real improvements in lumber technology because everything specs well it turns out that the casing of the lumber goes too far down to the ground to be. her feet are largely right but that doesn't allow any air circulation in there so that's why they go out grasses clumping and it took me like ten years to figure out that i'm a little slow but i was shocked when i found that the regulations were all posted online and that's the whole explanation so i few days later i found the hack. and there was a company that actually makes a specialized blade to get around all the problems that the government created with its regulations and you know that reminds me of like a short history of the world here in the government the market tries to make wonderful things for us and make life better and then the government comes along and messes that up and then the market tries to get around this government regulation

a little bit more by inventing new stuff and that's the short history of the world i mean that's that's what goes on in la morrison toilets with lives where you name the product or band-aid the found to same thing there it's true again and again so he said there's a lot on our situation there's a lot more regulation is symptomatic for you of a much much broader issue that is applicable to all of history yeah i know that i think well that's exactly right i mean that's the that's the essential drama of history more trying to beat back these guys so we can and improves improve the world and what annoys me about this is that you know for years i was blaming even not know this guy who celebrates markets loves privatized private impressed i was laying in the lawn mower companies like what's wrong with these people how complicated they can make of the salami i finally learned over time is something in the end the private economy begins to annoy you and it's a persistent annoyance that and seem to be corrected you need to look for government regulations and if you look you will find that there's a problem and it's imposed by the government private enterprise doesn't usually

like to admit it like lumber companies don't come out and say we'd like to give you a lot more than words but that the regulars on let us do it so here's a slightly credit version or so so they get the stuff that way maybe a little bit capital. stop you right there hold on we will have more with you we've got to go to a quick break we'll have more adelphi talk or author and executive editor of laws a fair books also still ahead do not go away i headed up to k. street to catch up with the group occupy the estes the and ask them how it's going to taken on the big bank lobby on the volcker rule the first your closing market numbers. you just put

a picture of me when i was like nine years old until she told the truth. i'm a contestant i'm a total get a friend that i love driving hip hop music and. it was kind of a bit yesterday. i'm very proud of the world with its place. you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else or see some other part of it and realize that everything you thought you knew you don't know i'm charged as a big picture. of.

what drives the world the fear mongering used by politicians who makes decisions to break through it's already been made who can you trust no one who is you know view with a global missionary see where we. cutting state controlled capitalism is called the sessions when nobody dares to ask we do our tea question more. the so. all right we're talking about all things government regulation and the things they mess up in your life from lawnmowers showerheads to letting your kids work on your farm i don't know this is a debate going on now about whether or not children should be able to work on the

farms of their parents jeffrey tucker is going to tell us more about it and his take he's executive editor of law's a fair books and author of it's a jetson's world private miracles and public crime so jeffrey what's your take on this child labor thing well it's a very common thing on and rule america for kids you know nine ten eleven are you know you've been younger nephews you know as uncles you know every everybody needs is to get around you know to kind of be part of the work environment of the farm and it's a wonderful thing because as we know in urban lives are very few opportunities for kids to get any work experience and fun and room farm life you know their raise their feet they're waking early feeding the chickens to my unbelievable astonishment the obama administration the other day and no doubt on behalf of big agriculture proposed a rule that would have gotten rid of the whole of this industry and right for culture of rural agricultural life in america by forbidding anybody but direct

children of the farmers to work and so like if you have a cousin that comes know he's not a lot of work you know that fuse and misses or anybody i mean this would have just caused chaos now i must tell you fortunately the ruler america rose up and outrage and so this is preposterous who these jerks think they are who do that who are these city people who know nothing about the way farms work to tell us what to do here and so they have apparently for now beat back this regulation but no doubt it's going to come back again next month or the next month or the next month and you know what though i'm just so tired of this i mean why is it that we have all have to dedicate our lives to demanding the. that we give a temporary respite for the from the best to them so it's like how many times we have to tell washington just leave us alone to manage our lives and everything will be just fine i mean it's should be part of our rights i mean that's what jefferson well yeah and i syria you on

a lot of the points that you're making in terms of liberty and that kind of thing but it's not just liberty that we're guaranteed in this country were guaranteed liberty and justice for all and i find it difficult to make a case that you shouldn't be involved in some way if you're the government and making sure that nine year olds are not being exploited in the fields working under abusive conditions or in factories or anywhere for that matter how do you how you argue that i've been to some farms we were actually visited a farm or two in my life and. i've i've i've i've drank the milk that tastes like butter and the butter that tastes like cheese you know all the weird stuff that farmers have but anyway it turns out the kids absolutely love their lives they love driving the tractors they love feeding the chickens nobody is being exploited and it's a special culture of its own special ryobi and they're human beings too and you know what they are very very fortunate because the least they're given a skill i mean i like that you know in urban populations all the kids are strapped

to government tax funded desks and forced listen to propaganda you know for thirteen years and then and then thrown out into the world you know whether can't even get jobs because they don't have any work ethics or you know ability it's also it's so many ways the root population's fortune because of this little exemption the existing law is there's a lot of those late thirty's f.d.r. behest of the labor unions but it had an exemption for farm workers and child actors and reefer makers you know that if you're a he got to buy groceries makers you got to get to give them liberty and you know that's right and the child actors of course i was all. you know who shirley temple but i. think anyway so jeffrey where you draw the line because this is just you know the kids of farmers that should be able to work and good thing that they have their exemption or should there be more broader allowance in your view for kids to

work out and where do you draw that line yeah i would say that there should be absolutely no laws on child work parents care about their kids that they want sure no better what's best for them than government that's for sure well i don't know a lot about it abusive parents that would you know sell their kids up a river to make a dime because they're addicted to drugs or whatever well that does go on but the regulations are prevented that now are they or they're mostly just preventing you know nice productive warm human relationships from forming in the whole of society that i mean governments regulations don't actually prevent the nightmare scenarios you're describing i'd like those things to go away too but they will go away through greater prosperity and greater advances of civilization and that's to say i see but all these very good lay shoes are preventing look at teenage unemployment look at a employment among twenty year olds it's catastrophic so it was one of the obama administration do they find some kids who have jobs they go up that's a disaster we've got to make them unemployed to go yeah this i'm glad you did touch

on that youth unemployment we do have just a minute left but what is your take on what impact that's having on the economic prosperity long run for the u.s. . well you know lauren i'm generally very optimistic despite all the horrible things overgrown in the world but this subject really disturbs me because we're seeing sure teenagers people are chinese working really have ever seen on and. is very worrisome for our future because they're they have they have a lot of skills a lot a lot of skills and they're up being about being used and they're being shut out of the labor market by you know high minimum wages high regulations the. payroll taxes the high cost of just hiring the the economic stagnation that's a consumer of sectors and you know we're really talking here about when we're talking about the young we're talking really about the future right that's a that's a great point that's a great point jeffrey i appreciate you being on the show it's always very colorful

and interesting to hear your perspective we really appreciate your great thanks terry tucker that was he's author and executive editor of law's a fair books and while we're talking about regulation we did catch up with members of occupy the s.c.c. the bank lobby antidote is one way you could think about them after they had worked on the hill monday talking about the volcker rule now since we last had them on this show we've gotten some news we've had clarification on how long banks have to comply with the rule and the london whale of course made a splash and headlines about proprietary trading so i had a chance to ask them about both. i mean aren't k.-street this is the symbol of washington lobbying and according to the center for responsive politics wall street as an industry together with insurance and real estate is the third biggest spender now one of the more recent efforts have been working to influence or postpone the regulation this is what's supposed to keep banks federally insured bank from

betting for the house what's known as proprietary trading now another group is here occupy the se feet there ball and here is money that used to work on wall street they've been coming to washington to try to bring a different message to regulators than a bold crack at banks they're here briefing congressional staffers and we're going to catch up with them and get an update we heard earlier that there was a clarification that banks will have two years from the july twenty first two thousand and twelve date to comply with the volcker rule so from your guy's perspective what are you working on doing now so we're really trying to get the word out about the volcker rule because this is an ongoing fight the banks didn't sort of pack up their bags and go home after this entered the room making phase they're sort of in there all the time the two more years is actually a conformance period after the issue or after the finalization of the rule during those two years the rule can't really be watered down without new rule making or without a new statute so the watering down if it does happen is going to happen between now

and whenever the final rules come out it's scheduled by statute to happen by july two thousand and twelve it's probably not going to happen that's for the regulators at least until september so what about just to pick off of some of the recent news that has been kind of high profile for example the london whale who is a trader within j.p. morgan who is making these huge bets on c.d.'s that have rattled the derivatives market and it turns out he works in the treasury which now more exacts have come out and bloomberg has reported they say that they've essentially turned the treasury into this giant prop trading operation is that the sort of thing that should be a big red flag about why we need the volcker rule and also is that something that banks would be able to do in or. or to get around the volcker rule something like turn an operation that supposed to be about hedging into prop trading but say this is hedging this is what we're doing here and have it be ok i think that it is a big red flag it is a big case for the volcker rule i also think that one of the things that we tried to do when we wrote the letter is think of scenarios like this about where they might hide their proper trading but i do think that j.p.

morgan is in a very bad position now especially now that the market knows about this position it's going to be very hard for them to unwind it so it's a perfect example of why proprietary trading is not only risky to the entire economy but is it risky to the banks that conducted because j.p. morgan is kind of in a bind now one thing the news that's come up recently is the possibility of quantitative easing right q e three and i think that really underscores the importance of the volcker rule and that's something that really hasn't been addressed very much so the purpose of the volcker rule is to reduce the risk that banks have to the global economy in terms of too big to fail but the banks also have another risk to the economy and that's from from inflation. bank holding companies have access to the fed discount window quantitative easing etc and as that continues and as banks do poorly and need more and more funds coming from the federal reserve what that does for the rest of the economy is that deleuze the value of currency. and that affects everyone so to the extent that the volcker rule

can contemp down on the the risk taking that banks take the need for some of these fed policies would also be can commonly decrease a lot of savers of be very happy about that but on the note of would you be able to with what j.p. morgan did with the treasury is that an example of how banks could even get around the volcker rule once it's in place so this is was kind of an i spend occasion for us because one of the things that we put into our comment letter was we were very concerned that the proposed draft of the rules said that you could hedge at the part folio level and we sort of argued it makes a lot of sense to head to the portfolio level for counterparty risk and that's about it and so we actually argued. it stridently against that and said you should be hedging at the desk level and so the way that j.p. morgan is sort of claim what they were doing is they said that they were doing portfolio hedging and so this was one of the reasons why we were concerned about the current draft and so we do think that it's important in the final version of the rule that they think more carefully about what kinds of hedging they allow or we are going to see situations like this where j.p. morgan just claims oh i was hedging at

a portfolio level and to the tune of you know hundreds of billions of dollars and just to be clear there's not that level of clarification in the rule as it stands now you can hedge at the portfolio level right now and make use of what's called the hedging exemption which allows you to essentially what would otherwise be called prop trade it is exempted from it so you're allowed to do it you're allowed to hedge at the portfolio level and we argue that you should really only be hedging at the desk level so the london whale can continue to have a whale pod you look like you want to add something yeah i was going to say that it was it's an interesting time for that to come out because we have this rule that needs to be finished that needs to be finalized hopefully by july we have the conformance period and we also have many banks saying that they've closed their desk they're not doing this anymore they're moving towards compliance and moving toward of the rule but when you have instances like this it just it vindicates what we're talking about this is still continuing. and they meet with paul volcker soon critical that's all we have time for thanks so much for watching don't forget to follow me on twitter at lauren lyster give us feedback on you tube dot com slash

capital account and have a great.