welcome to the show we'll get the real headlines with none of the mersey come alive out of washington d.c. now tonight we're going to have our monday hangover panel and we'll continue talking about the two billion dollar j.p. morgan lost c.e.o. jamie dimon played defense this weekend on meet the press but his response only making it worse then you may not have heard but the state department approved parts of an arms sale to bahrain on friday we're going to ask why harper scott horton and a federal judge ruled that the n.s.a. doesn't have to tell us anything about its relationship with google and you guessed it it's because of national security so we're going to all of that and more fee

tonight including a dose of happy hour but first take a look with mainstream media decided to miss. part so it's a monday and the mainstream media is all over the place today there are some tech news and big finance news more talk about gay marriage and of course as the latest for politicians trial. massive manhunt taking place in southern california not for a known criminal but a highly trained and specially skilled f.b.i. agent yahoo c.e.o. scott thompson stepping down amid allegations that he lied about having a degree in computer science what's going on at yahoo it's like a revolving door in the c.e.o.'s office black pastors and churchgoers tackled the topic of same sex marriage sunday days after president obama expressed his support for it poured among african-americans for gay marriage is lower than the national average john edwards' defense attorneys to call their first witnesses today we

going for a version with a picture of president obama calling him the first gay president of the birthday mark zuckerberg facebook founder and c.e.o. turns out get this twenty eight today even ivan is missing in the mountains to be carrying a handgun and is described as suicidal mark zuckerberg the twenty eight year old american success story opening a person called i want to make facebook worth one hundred billion dollars a two billion dollar blunder by j.p. morgan chase big banks chief investment officer retiring today people can chase taking a bet and losing big time has already rolling this morning. now one thing that's missing as usual are a national security or foreign policy stories so i've got a funny to me considering how concerned everyone is or pretends to be with our national security but the mainstream media likes to pretend that our words also don't exist unless of course there is a foil plot or

a bad guy that was killed the rest of the time let's just not talk about all the things that are going wrong right that's no fun and so of course it's the pentagon doesn't like anyone prying especially not the press then why even bother now yemen and the increasing operations by the cia there are perfect example. united states on the whole in yemen it's a hot spot that country claiming u.s. drone strikes killed eleven terrorist over the weekend. no immediate confirmation from the pentagon on that which usually does not publicly acknowledge that strikes anyway. i'll give fox a little bit of props for at least spending ten seconds bringing it up but of course is only because we supposedly got eleven bad guys which the pentagon won't even really confirm i didn't see any of the other cable networks even blink about this story today and if you ask me that's a problem and it's a problem because we've learned increasingly especially over the last few weeks about the growth of our shadow war in gamut from the cia signature strikes being approved by the white house to this whole underwear bomber plot two point zero

fiasco but it's no coincidence that just weeks after the cia's drone program is expanded we suddenly see a lot more drone strikes happening and don't forget that think interest rates are the ones where they don't even need to know exactly who they're targeting it just has to look like suspicious behavior the point is that yemen is now a hot spot it's turning into the new was era staton everybody just kind of takes it in stride they're so used to our border lives globetrotting worldwide war on terror that it just seems normal oh the worst of the worst are in yemen now ok no questions as to why no reflection on our own actions where they're contributing to it and also no concern for the fact that this is what we used to do with troops out of iraq with the war in afghanistan winding down from now on we will know less and less about our government's operations abroad the cia as a paramilitary force is in full action and they will continue to get to operate outside of any laws and without having to admit that they do any of it and personally as an american i don't like that that makes me worried i want to know

what the government is doing on my behalf but the rest of the mainstream media well they just don't seem all that concerned they just take it with and on to the next one attitude and forgotten that their job is to question those in power about why they do what they do not just to be observers that's what they choose to miss. all right so it's only monday but there is a lot to talk about because the news does not stop over the weekend and today the fallout continues after j.p. morgan's whale fail of two billion dollars of a loss three of the highest ranking executives with direct ties to investments will be resigning this week but not c.e.o. jamie dimon in fact diamond went on meet the press this weekend to lay out his defense and let's just say that he wants everyone to know that this was a big mistake but it's not that big a deal the company will handle it and he doesn't really see the need to regulate

most people however think exactly the opposite i'm going to hang over panels here to hash it all out. for you very. joining me to discuss this today is william black associate professor of law and economics at the university of missouri kansas city and author of the book the best way to rob a bank is to own one and take breuer chief strategy officer at vision strategy john i want to thank you both for joining us tonight and i'm going to start off by just playing a little clip of jamie diamond from meet the press this weekend this obviously didn't air until sunday but friday right away they were on it and they did the interview prerecorded take a look we had what it risk compliance and we're best people look at all that we know we were sloppy we know we were stupid we know it was bad judgment we don't know if any that's true yet of course regulations look at something like this that's their job so we are totally open kimono regulators they will comes their own

conclusions but we intend to fix it learn from it and be a better company was done. so he's actually saying i understand the regulators want to look at this sure take a look but don't worry we'll still fix it on the inside and william i want to start with you and just what do you think of this entire scenario is teaching us anything that we didn't know already about the need for regulation. well it certainly confirmed what we thought we knew which is first the industry doesn't seem to learn many important lessons from the crisis that was acute only four years ago second the regulators assuredly haven't learned anything and at the current state of play it's not finalized but the current state of play is that the industry has created a definition of the volcker rule that you can drive anything through so a hedge is supposed to be something that offsets and reduces risks this suppose it

increased losses by two billion dollars or more and j.p. morgan is claiming it counts as a if so everything in the world is here this is the version. of edginess sort of like truthiness not really a hedge but we get to pretend it's a yeah not really what i would call risk free behavior for so as i said right there are three people that are going to be stepping down here but not jamie diamond i mean do you think sure there's going to be an investigation maybe a lot to testify on the hill but probably a lot of people are out with pitchforks want to die well people should be out with pitchforks because this is the kind of thing that we should not happen any longer we were told that the new bills new laws in the behavior of the banks would change i do think we need to be a little careful though of just how hard we come down on this stuff you don't want to just go throwing out c.e.o.'s of banks the thing that i hope we take out of this

is actually we start to distinguish much more strongly between banks and banking and what's been happening and hopefully you can weigh in a little bit more on this is well is if you're going to hold my money you don't get to go to the racetrack with it right that that's the kind of thing that i think we need to make sure is in regular there's no such thing as a rational market and any time you have humans making decisions they will not behave rationally they will go and try to take risks that will make more money back if. going to do that you need to be over here in this other category if you're going to hold my money be in this place and if you're going to do that be over in this place and that's still a lie that has crossed way too much i think that's what we saw here at the end of the day though this is two billion dollars in a company that has two point two trillion dollars in holdings it's actually not that big of a deal in terms of the amount of money it's a big deal only a breach of trust and i think that's what's really something we need to take a serious look at well you know and a lot of people are saying that of course the fallout is going to be much larger it's going to be more than two billion dollars at the end of the day if they end up losing but i mean you bring up an interesting point here too which is that this

london whale right he had three hundred fifty billion dollars that he gets to play with and it starts begging you the questions that if the banks have three hundred fifty billion dollars you know why aren't they may be increasing the amount of loans that they give to certain businesses why do they keep gambling with their own home. well what's going on of course is that this is a systemic loosely dangerous institution there are roughly twenty of them in the united states and the government's definition of these entities is that when the next one fails and it's when not if it will cause a global crisis and their position their trading positions are so large that they distort the markets and they blew that even if they lose ultimately j.p. morgan will not be allowed to go down and its creditors will not be allowed to go down so why should the creditors bother bother to discipline the place means they

can borrow money more cheaply the conservative economists say that the effect on the market is like bringing a gun to a knife fight so we have to end these kinds of institutions we have to shrink them down to the point that they don't pose a systemic risk and they would actually be far more efficient what we're discovering again not discovering we reaffirm ng is that places like this are too big to manage as well. and that's one of the things to write is that everyone applauded jamie dimon and j.p. morgan for a while for being such good risk managers compared to all of the other banks out there that were isaac but these guys were supposed to be the kind of mostly a little bit trusted bank that still was out there we could we could go to town of these guys and say that's where i want to be safe and i'm not so sure now we're not so sure but i'm curious as to what you think about this interview that was done you know on the at the press to sure i get it maybe david gregory isn't

a financial expert but he didn't really hammer away at him and it's no big deal right i think i think gregory was lax here going to time when you really got to go into town and i think you kind of saw dime and go oh you know we're going to screwed up a little bit we're going to fix it so we'll get a whole bunch of you and kind of went oh ok well that's good enough you're the c.e.o. so you know better and that just really can't be ok when you're dealing with other people's money now i agree with that really what do you think that we are going to see come out of this because we have seen for example senator carl carl levin come out who's been trying to also take part in writing the volcker rule we've seen elizabeth warren come out and saying that jamie dimon should also step down and we've obviously seen a renewed push for more regulation more of these calls for break up the big banks maybe some of the occupy wall street rhetoric actually being completely vindicated but what kind of action will this scandal actually produce or results or is it just going to be kind of something that everyone yells about the media for

a little while then forgets. well this is what diamond has actually been pretty express. like my colleague he said well you know the dollars aren't all that big compared to how big we are but the timing is terrible and the timing is terrible from j.p. morgan standpoint because j.p. morgan has been absolutely completely successful in trashing the volcker rule first it's delayed the volcker rule and second it's made it into a fun ours where everything counts as a judge even things that lose money instead of offsetting losses get to be treated as hedges so the only chance we have of you know re storing the volcker rule to be something meaningful was frankly this kind of screw up early on by an entity like j.p. morgan which pretended to be the best so it is the god then in terms of potentially

protecting the nation from loss but we have to be the big banks and we have to be geitner treasury secretary geithner who actually opposes the volcker rule and we have to beat the federal reserve which actually opposes the volcker rule so it's a daunting task even with this embarrassing loss there never waste a good crisis and this is if you're in favor of the volcker rule if you're in favor of getting some additional regulations on of the banks so that they don't do things like this then this is a good thing oh yeah but it's not just people that are already in positions of power at the moment that are opposed to that you also have mitt romney who is going to be running for president who wants dodd frank repealed right and i think even preval coral being done as i do think that actually shifts the conversation somehow when it comes to the election i think it has to i mean you mentioned elizabeth warren i think this plays exactly in her wheel house this is this is the thing that she is a pillar of call the strength of the people who just need to rally around

a. who's going to be out there in public and running for public office because she was the original director of the consumer financial protection bureau and then of course was was not allowed to be the director there but for mitt romney for these folks this is this is bad news if they're going to try to repeal something like god and i think you're going to see that argument a lesson on the right and you're going to see folks like a little bit more really stand on this going for the next couple weeks although i wonder how much people really know right i thought i think they probably see a headline that says j.p. morgan two billion dollar laws nobody knows a proprietary trading is and i wonder how far as can extend when i want to change the topic really quick to in the sense that euro zone central bankers are for the first time really talking about the possibility of a greek exit from the monetary union and this i mean this is something that everyone's been going around in circles for right with such a person a long time but how big of a step is that. that is perhaps an

a step that will lead to the unraveling but it's really the euro was fatally flawed in its design and then this was enormously exacerbated by the germans with their austere earthly principles because austerity has put the entire eurozone back into a double dip recession and it's put the periphery into a full fledged great depression where they have over twenty percent unemployment and youth employment unemployment of over fifty percent but that is completely unsustainable politically and socially it will tear apart the e.u. and so all of the elections have been going the wrong direction from the german standpoint europeans will no longer put up with it in fact significant numbers of germans will no longer put up with it greece needs desperately for its own reasons to be out of the euro the euro would be the potentially

sounder it certainly would have been better for the euro of greece was never admitted now that it's a bit mid a greek withdrawal may also lead to withdrawal of other nations of the periphery again i don't think that's necessarily a bad thing for the euro but it certainly means massive term or turmoil for months and people are responding in certain ways definitely with the elections there if you think of greece if you think of france and so lastly taken and i think would give you a different topic as well there's just so much to talk about and which is the fact that over this past weekend there are more than two hundred thousand people that actually lost there and one hundred thousand are turned their yachts right thanks to some reshuffling there in terms of the federal rules how it applies it's no longer ninety nine weeks which is the longest seventy nine if your unemployment rate flick it takes down slightly that and it is no longer seen as increasing. that the federal government doesn't have to give you that full extreme or limit

unemployment benefits and i mean it's a it's a really big issue and we're just going to see this happen more and more and it's only going to happen more and more in fact i think seven more states come up in september for the cancellation of continued benefits and and when people see an employer talking a really big numbers are almost so big it's like we talk about the debt we talk about trillions people can't quite conceptualize what that really means. and right now in our country we have millions of people who have not just been out there who are just out of work they've been out of work on average for months and months at a time in fact forty percent have been out for over six months thirty percent have been out of work for longer than a year and if you think not just about the not just what that means financially for your family for yourself but but what it means for your self-esteem for your ability psychologically even to go back into the job market and really be looking it's not just an economic problem at this point we have a we have a morale problem in this country as a result of these numbers and so as those start to happen i think we have to have some serious adult conversations about how we're spending our money and we yes we

don't have a lot we've got a big deficit we have a big debt but we are putting money in other things that we could be taking you know we keep saying numbers that like consumer spending is up and everybody think that's a great sign but then you know the last time that these figures were put out in terms of two thousand and ten the amount of people whose unemployment benefits for long term unemployment ran out one in five of them then fell into poverty definitely there needs to mar discussion reducing poverty in this country right now i want to thank both of you gentlemen thanks much for joining us tonight thank you thank you. i have stuff to come tonight you might not have heard that the bahraini crown prince has been given arms to both of us are going to talk to scott horton figure out why they try to get it without anyone noticing.

you know sometimes you see a story and it seems so. you think you understand it and then you glimpse something else you hear or see some other part of it and realize that everything you thought you knew you don't know i'm tom harpur welcome to the big picture. wealthy british style. that's not on the title of.

markets why not. come to. find out what's really happening to the global economy with max cause or for a no holds barred look at the global financial headlines tune in to kaiser report on our. me it is easy to. see.

well here's something you probably didn't see reported on late friday evening just as the state department probably planned it want washington to his and attend his son's college graduation bahraini crown prince also met with vice president joe biden defense secretary leon panetta secretary of state hillary clinton and other high ranking senators and he left with an arm steal the sales but in the news for a long time while there is still a hold on certain items things like tear gas stun grenades humvees parts of it all

the things that officials won't discuss have been approved and it's not exactly great timing considering that was just a few weeks ago the president obama gave a speech at the holocaust museum decrying syria's crackdown so why is bahrain's swept under the rug and arms sales are approved and what exactly does this have to do with our national security which the state department said was the sole reason for the sale being made joining me to discuss with scott horton contributing editor on legal and national security matters for harper's magazine scott thanks for joining us tonight and this is not the first time that you and i have spoken about this and obviously there are a lot of people that are upset about this arms deal there is of hypocrisy to say the least but at the same time i mean it the timing too right if you talk about this speech that the president just recently gave you really have to sell arms right now. well that's the question i mean you know it. really screams double standard you know this is occurring at the same time the united

states has been pushing aggressively against the regime in syria not only seeking to enforce an arms ban there but actually siding with the rebels. and pushing their case aggressively calling for an international criminal court investigation of the regime there and bahrain all right you know if we if we count this just by civilian deaths yeah the situation in bahrain is not quite as serious but there have been deaths and there's been a great deal of brutality targeting the demonstrators there but the u.s. attitude towards the situation in bahrain has been quite different it's been to press reconciliation and today is this news is spreading about the arms sale we see you know the state department making announcements calling on the demonstrators to refrain from the use of violence against the police which is a rather bizarre turn was interesting the say that today we hear this story is

spreading everywhere i mean normally the way things work here in washington is that if there is some kind of news that you want to get lost in the weekend you do document dumps on friday evening because that's when everyone else has checked sounds of this is something that's important for our national security as they're selling it why try to dump it on the friday night. because you don't want people to pay attention to the story and here you know i mean there's no question about why this is being done bahrain is one of the oldest supporters of the u.s. in terms of its defense strategy in the region it's the home of the fifth fleet it's viewed by u.s. defense planners as a key pillar and the relationship with this particular region which is a minority regime in the country has been tight and i think you know what's in the background here in addition to that is the fact that it's questionable whether this

arms sale can in fact legally be carried out because of the leahy and then that's a piece of legislation that precludes the sale of lethal equipment and certain other kinds of equipment to security forces of a state been linked to a consistent pattern of human rights violations and of course we've got that in spades in bahrain and very well documented and that's a good point and one that most people out there are not bringing up but there's an interesting you know if we look at the way that. the i guess you could say bigger powers have been trying to deal with the arab spring and with certain uprisings that are going on out there and you and i record spawning about this earlier today is that there is this attempt to try to strike some balance between what now is more of a greater expectation amongst the international community to deal with human rights abusers versus obviously still keeping your national interests in mind and you can see that with syria and russia and china you can see that with the u.s.

involved reign but would you say that that's something you know is it new is this if it shifts that we're seeing. well i think if we quit if we look back thirty years we just didn't see this sort of thing happening it's happening today and i think you have to say on balance this is a very positive sign i think you know great powers dabble in the region and they realize that they can't ignore the human rights issue and they can only use it as a propaganda tool against the other side of course although those certainly do that and i think we see that in fact with russia and china in syria as you just mentioned you know they sided with president assad but they've also prodded him to accept the united nations mediation other things i think they see that the human rights dimension is one in which they must demonstrate their engagement same thing with the united states and bahrain there's plenty to be critical of here especially with this arms sale on the other hand it's really quite remarkable that president obama's criticize them secretary of state clinton has and her assistant secretary

for human rights mike posner almost seems to live in bahrain these days he's deeply engaged trying to press that government to be more receptive to reforms and to ignite a reconciliation process so i think we see outside great powers playing a significant role trying to push the human rights agenda forward and that really is something new i'm curious to get your thoughts i don't know if you are able to hear how i started out the show tonight but i was speaking about more drone strikes in yemen over the weekend for which the pentagon has not really taken responsibility at supposedly eleven militants were killed but in the last few weeks that the expansion of the cia's drone program there with the finding out about this boiled plot with the devil triple agent whatever you want to call him you know clearly our entire operation there the cia is operations there are expanding and you know what do you what do you think i mean it is becoming the new hot spot

they're being very very aggressive about it. well i think that's right i mean i think there are actually two really significant recent developments i mean one is the disclosure of this double agent relationship of course the cia's been criticized for a long time for not being able to get double agents into positions like this so this was a very significant important breakthrough for them but then the second question is why this that fact get disclosed and get tatted to the american media you know hey we had a breakthrough not a smart thing to do a sort of a interesting public relations offensive but then the second thing here is as you point to it is the second front in the game and so we have the cia now conducting a tactical military operation and pakistan you know two hundred seventy hits roughly over a period of well all together seven years eight years coming up and now.