you're watching around the world these are all top stories from moscow egyptians are voting for a second day but they're still unclear over which powers the ruling seat and whether the winner will respect the people's revolution none of the thirteen. majority in the polls next. is the syrian regime and the rebels in its latest report on the conflict warning that it's getting increasingly militarized documents says damascus is responsible for most of the opposition's accused of kidnapping torture. and latvia's nursery nightmare nazi sympathizers a film showing off real war weapons to kindergarten kids build

a national history lesson is no less raising alarm over the glorification of. more stories online twenty four seven at r.t. dot com next on this channel lauren listed provides their insights into the day's headlines from our studios in washington d.c. here's tonight's capital account.

good afternoon and welcome to capital account i'm lauren mr here in washington d.c. here are your headlines for wednesday may twenty third two thousand and twelve as an informal summit of european leaders has observers worried about a greek exit and seeking signs to show where the eurozone is headed look at the market german thirty year bonds two percent for the first time ever meanwhile for the privilege of lending your money to the german government for two years you can get paid a stunning wait for it zero per cent now these rates aren't suppressed by q.e. years are up like in the u.s. so we'll talk about what this indicator says about the fear that is building and according to media reports the guessing game is underway for who will replace timothy geithner as the u.s. treasury secretary now you may be asking why would anyone want to try to tackle trillion dollar budget deficit and a tax overhaul for a salary on hundred fifty times less than their wall street buddies like jamie

diamond well we're wondering that too so we'll ask a former treasury official if this is a public service or a one way ticket to a massive private sector pay off also in the wake of facebook's i.p.o. full lop we see small investors suing regulators subpoenaing and u.s. lawmakers supposedly searching for answers now retail investors for one are asking if they were fleeced but we'll show you how this could have all been avoided if they just watch capital account let's get to today's show. let's step back and take a look at the bigger picture than the headlines that i just went over so america

once prided itself on being the beacon of freedom and the land of opportunity we saw immigrants flock here by the millions from countries all over the world and it wasn't just america's physical dimensions its untapped resources its rich landscape but also its unique commitment to individual liberty and the rule of law that made it such a tempting destination for those looking to escape the futile architecture of the old world now it would be overly simplistic to pick a specific date after which things began to change for the worse in this country the spanish-american war the establishment of the federal reserve the establishment of a permanent military architecture after world war two the end of bretton woods the deregulation of the financial sector the patriot act the list goes on and on you can choose what you like best what is clear though is that a lot of americans for them the future looks less promising than the past and

unless you work in one of america's highly subsidized industries such as wall street or defense you're stressed but if you're one of the many maybe working in these two anointed industries things perhaps have never looked so good now there was a time when wall street grew earnings and profits off the back of real economic growth and the purpose of banking was to finance investment and aid in the movement of capital from savers to investors the end result was a real economic growth today the financial services industry resembles more like a giant parasite sucking the life blood of capital out of the economy it derives its profits by doing exactly the opposite of what it was tasked to do by siphoning off capital from savers and moving it into the trading accounts of speculators and . tony executives at banks who pay themselves disgustingly outrageous bonuses all

under the guise of being systemically important so they say or systemically dangerous as more of our guests say now americans aren't stupid they know they're being fleeced they see images like that of police pepper spraying defenseless women and this is all while building barricades around the ivory towers of wall street bankers who continue to plunder the wealth of a generation of americans and cumbered and in europe of course you see greeks revolting against the same kind of plundering of their country now this has observers looking to meetings of european leaders like the ones going on today for signs of where this is going next here to talk about it with us is paul craig roberts he's an economist and also former assistant secretary of the u.s. treasury that was under ronald reagan first dr roberts thanks for being on the show welcome back to capital account thank you yes thank you now let's start our discussion with we just gave a long sermon on wall street let's talk about who regulates it because you used to

work at the treasury and now people are starting to wonder and think about who's going to be the next treasury secretary because timothy geithner has made it clear that it's not going to be him we know timothy geithner his background we know that he was at the new york fed before the treasury we know he has ties to wall street do you think that over the years this position has gone from being a public servant to a lobbyist for wall street of sorts. but. the treasury and the financial. gain share. well let's go back let's go back and talk about that because the clinton administration was when some very key things happened in terms of financial deregulation you've written about the cost of that deregulation to society what would you say the main costs are. we're all out we the main cost is the financial. industry in the united states no longer serves a useful social purpose it's just

a gambling casino that serves the purpose. of the people running it and at the expense of society because they pass on their losses to the average person who's really not have an income gain in twenty years so. the cost is that they have totally privatized profits to the extent that they don't even pay income taxes so that is the banks themselves but all the losses are dumped on to the taxpayer so this is this is a net loss to society the american financial system is a net drain on society if we didn't have it we would be better off that far by true trillions of dollars better up so it doesn't perform his full social function and if you had to pinpoint any of deregulation any bills that were thawing or that were repealed what would they be that have created this situation yes where you know

glass steagall which now lets them gamble with the positives deposits depositors money. the the removal of position limits on speculation which now lets these huge financial institutions dominate commodity markets. and drive up. prices if you will sued. and also they now are able to leverage their little bit of equity to extreme lengths in order to maximize the return on equity say that the higher the return on equity is where the way you get it is to have tremendous debt so you take a little bit of equity and you live rich leverage it dramatically and then your eternal mornings go way up the only trouble is if you make a wrong bet then you dump all the losses on society so it's.

these these are the main things that are to so you so you mentioned the repeal of glass steagall and that happened under president bill clinton and you know he also did another thing which was sign the commodities future modernization act which made it so that derivatives really couldn't be regulated so let's talk about who deregulation has paid off for not just wall street but these politicians and officials because matt miller. capitalism wrote a really good post about this speaking fees from banks that president bill clinton received in the decade after he left the presidency and you have banks paying him one hundred fifty thousand dollars for a one hour speech this is amounted to eight to ten million dollars for that decade or no excuse me eight to ten million dollars a year for that decade dr roberts what in the world are these banks pay him a hundred fifty thousand dollars an hour to say it with no idea what they're paying

him for for deregulation. and. you know will be paid as well he'll do have some huge job. and. it's more than revolving door goes in and now even if you have a big job. for example balls and moves the c.e.o. of goldman sachs you come into the treasury in order to get. more contacts better contacts not just here but all over the world so that your so that you don't censor embarrass and expand they expand and when you leave you're going more valuable so. there's no service was no public service involved anymore it's all whose interest can i best serve to have this pay off for

me. could those could that and pay off your service in the treasury could it pay off a less you are still a member in the political class and go along with what wall street wants or advance their interest is that necessary in order to secure the u.s. eking fees that's that's how it works right when and when it does change because you said that you don't think it's always been this way i'm just curious because you were at treasury in eighty one i believe what changed. well. what changed was the deregulation because this let them realize that the there was no constraints left on them that there was no reason they had to behave at the glee at the clear will properly and the new way will close all the constraints to go there's centrally. or now also. of washington's effort to protect its worldwide economic interest so they have washed

and put pressure on the euro they don't washington short of gold and silver to protect the dollar and the banks or wall street the big banks are now just out of the federal government's self protective mechanism and so in effect they're part of the government there and that's why they don't get prosecuted for their crimes if you if you look at all the crimes that are associated with the financial crisis and nothing has happened to anybody and this is what some strange and so when president and in my opinion it's because the banks now serve as and jumps to washington and the political class and the political class serves as a lobbyist for the banks just to give our audience a little bit more context to a former treasury secretary because i looked into this so robert rubin who was also under bill clinton he went on to work at citi group made one hundred twenty six million dollars during his time there reportedly and larry summers who has been in

and out of public service and a aca done academic his rate did ok when i looked back at what he reported for two thousand and eight two point seven million dollars that year in what is no speaking fee a lot of them from the big banks five million dollars from a hedge fund so there is really seem to be the payoff for deregulation that just isn't there for regulation dr roberts when we get back i want to talk about all of this. looking at europe which is switching gears but still some of these issues there look like you wanted to to say a finishing thought you have a couple seconds if you want to do. well didn't ruben come into the treasury for him right you did is he the chairman of goldman sachs so he comes he comes and goes and sexy treasuring goes back to the back it's the revolving door we know that the speaking fees are really the alarming thing to me i thank you we will be back with more with dr paul craig roberts economist and former assistant secretary of the treasury under reagan. still ahead despite calls from columnists and pundits jamie

diamond remains on the board of the new york bed but not for long as two senators going to bed will give you our three cents on a bill targeting federal reserve conflicts but first your closing market numbers. with. slaves technology innovation all the moves developments from around russia we've gone to the future covered. you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else and you hear or see some other part of it and realize everything you thought you knew you don't know i'm tom harvey welcome to the big picture.

all right welcome back so we've been talking to paul craig roberts about conflicts of interest you could say about the fine men that have served the united states as u.s. treasury secretary and then go on to make millions a lot more than they make as treasury secretary when they go to serve wall street or give a speech to wall street banks now despite all this is just one example we haven't

seen people in the u.s. get angry to the extent that we've seen it in europe where they have a debt crisis that maybe you could argue has affected them a lot more close to their lives especially in the situation of greece where they've seen immense cuts to the public let's talk about it because right now eurozone leaders are meeting to talk about a lot of people are wondering if they're talking greek greece exit contingency plans or euro bonds we don't know but here to talk about what really is going on in europe as you see it is sees it as paul craig roberts economist and former assistant secretary of the u.s. treasury under reagan so kind of segue in from our last conversation dr roberts why do you think it is that we have not seen the kind of unrest in the united states that we have seen in europe in response to economic strife and turmoil. because the cost have not been pushed on to the american public. anywhere near the extent that

they've been pushed on to the european public you see the bailout of the banks here and there's a lot of talk about oh we'll have to cut social security medicare and all that sort of thing but they haven't really done it. but in europe they have gone and you know greece they've cut the pensions they cut all kinds of social services employment people are actually feeling the consequences of paying for the mistake of the private banks who over invested in sovereign debt and that hasn't happened yet here and so that's the real reason that the greeks are in the streets was model top cocktails throwing at the police and people here are sort of insouciant as to the gathering storm do you think just to follow up on that briefly if there were cuts to medicare medicaid social security of anything never get them out we would

see this in the united states. well that affects mainly the older people who have a hard time. rioting but in the sense that if it comes back to their children. you know mom and dad can't. exist independently anymore and we don't have anything really to spare then yes in that sense that it filters down to the younger set up i think this type of. dissatisfaction. can certainly rise sharply in the united states but that's only if they actually follow through this tall as you see isn't as long as a federal reserve can simply purchase the debt monetize the debt. which is something the greek central bank can't do all the spanish or the talent and it's something under the charter that the european central bank can't do so the big

difference is that in the united states the federal reserve can act as credit to washington and purchase its debt but in europe the central by the there's no no way for it to do that and so the pain comes to the people. directly in much quicker and let's talk about some of the reaction by the financial markets to this because you see borrowing costs for germany they've dropped to zero per cent in the case and some of those some of those bonds a two year bond that we talked about earlier meanwhile the government of greece is effectively shut out of the bond market and has to rely on direct funding from the i.m.f. from the troika making it i guess you could call it a qualified protectorate this is they need to greece in either i mean you could see this happening in other countries that are severely indebted in spain or in italy so do you think the markets are just going to continue to keep the pressure on these countries until the system or rakes or do you think the european federalists

will succeed in keeping the union together by force. i will that i think they'll be have to germany i don't think german is quite decided and you see the reason the german bonds you know now don't paint thing is it's a safe place to be because. the german economy is the strongest in europe they don't trust banks people are afraid to have the money in the bank because they don't know if the bank has to match the greek debt. and and so there's no place else to put it so the german bonds they say is safe and it's also coming here and they mistakenly think that. this is a safe haven united states so they buy treasuries and the treasuries interest rate goes close to zero and they and they get into dollars but of course the problem here the debt problem is it's probably even greater that's in europe

and the banks of probably and even worse situation so the whole notion that they're in a safe havens at all. is a very strange well before we go we just have a minute but you're it sounds like you think that europe is kind of kept some scrutiny away from the u.s. dollar what do you think of in store for the u.s. dollar. well i think if once the european situation is over the focus will turn to the dollar. and then it will be. the outcome will depend on also the formation of the group by russia india brazil south africa if they actually form this bank and use it for their own trading financing then this sort of cuts into the role of the dollar is research currency and so the whole thing starts getting through the skids and if the dow loses its reserve currency rule and finds its severely modified then the united states will experience all kinds of problems

obviously and it sounds like maybe europe is helping out the u.s. and the u.s. dollar and having that situation under control might have unintended consequences that whoever is the next treasury secretary since we've been talking about him or her won't be too happy to see on their watch thank you so much for being on the show that was dr paul craig roberts economist former assistant secretary of the u.s. treasury under ronald reagan. all right let's wrap up with loose change dimitris shannon we all know that it is

messed up that jamie diamond sits on the board of the new york bed we've talked about it before long before whale gate came along well now i'll tell you look bernie sanders barbara boxer two senators are introducing a bill targeting federal reserve complex take a listen. you know who were the people quote unquote regulating the banks all the exact same people who are being regulated if this is a clear example of the fox guarding the hen house i don't know what it's. so they're trying to do something about it presumably with this bill where it goes we don't know but we wanted to point out a couple of the other fed conflicts because jamie dimon has been the most prominent but c.e.o. of g.e. jeff immelt he was on the board of the new york fed the same time the fed authorized an emergency loan of sixteen billion dollars to g.e. and in two thousand and eight the chairman of the new york fed sat on the board of directors for goldman sachs when the bank applied was approved to become

a bank holding company allowing goldman to receive billions in federal reserve loans also the g.a.o. found that at least eighteen current and former fed board members were affiliated with the banks and companies they received emergency loans from the fed so do you think this bill is going to go anywhere because there are a lot of vested interests that will not want to even i mean it's a it's a small i mean i applaud british senator drawing it but the entire i mean bernie sanders wants to take this the federal reserve has taken in treasury all right i think you just get it all together and you have the same conflicts i mean come on one of the first it was i did it was very private it's run by the banks but if it's run by the u.s. government that's not any better they're doing the if you look at the structure it's freshest ok it's a public private enterprise so i mean it's got shareholders but they can't sell the shares it's not it's you just get rid of it completely the fact that. it's a trying still thing here and there but i mean i wouldn't even concern myself with giving jamie off because that's that's that's challenging the that's part of the good it's part of the deal if you have a fed you don't just get rid of the think entirely get rid of it oh so you're

saying as long as we have a fed you're going to have jamie diamond on the board and of course the name of the game a senator you want to add me think. the senators might want to watch out for their pac funding and their funding for their reelection campaigns because obviously a lot of it may come from the banks. i think if you're if you're if you're exactly i mean that's why they're not going to get any support from this and my view and i'm sure they will see that play out. right let's move on as the economy gets worse it seems businessmen are looking for more ways to keep more secure business through bribes like this. one of the business world thinks you think one hundred years ago you were living out here in tents in the desert chopping each other's heads off and that's exactly where you're going to be in another country so yes on behalf of my firm i accept your money. just business as usual maybe it is ernst and young found in its annual global fraud survey that fifteen percent of top exacts and leading firms said they would be willing to pay cash to secure

a business that's up nine percent from two thousand and ten so it does this show that crony capitalism is increasingly paying on this is the stupidest in the world going to why do you like those articles that are you know that inform us the commission the study all this money was spent and yes fried chicken is bad for you in that well obviously this is happening i mean we know the bribes are part of business that goes on i wanted someone to tell me this yes i mean this what is washington but the serious some of that really shows that it is increasingly paying off and that this is a better way to do business for for everybody in the way that we talk about on this show a lot we have why why is washington why i came to washington when i was amazed is about the amount of money that circulates here and how insulated it's a it is that people have lots of cash to spend or how do they get it is supposed to be published royce good or bing let's move on we really want to get to this story because we've heard all the facebook reports congressional committees are looking into the i.p.o. shareholders are suing the underwriter morgan stanley has been subpoenaed question

is did big institutional investors get material important information about facebook before its i.p.o. that smaller and individual investors didn't was it illegal did it hurt those individuals small retail investors that didn't know that the i.p.o. that the pricing was all wrong well you know what i don't know what's going to happen but this all could have been avoided if these retail investors watch capital account in the beginning of may reggie middleton laid it out very plainly. it takes a good story stop you do it to a very very good salesperson and what do you have you create froth ok now froth and investment potential not necessarily the same thing no matter what makes the price to sales price to earnings enterprise value cash flow facebook is grossly over value what the. under was the trying to push it. so when you have plenty of people crunching the numbers coming out saying things like that and the very public ways

there is no case for these small investors just don't follow the herd do some research they should be really bust blog and not listening to their to suck to their to their to yes the border. down the river examining the stock which is not being suckers but that's why we have religion yeah and that's why we have no more time thanks for watching the show be sure to come back tomorrow and in the meantime you can follow me on twitter at lauren lyster give us feedback at youtube dot com slash capital account and have a great night. you .