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who had brought down wall street. hedge funds. back in two thousand and seven with the blues still in full swing my business partner e. o'connor attended this party just off wall street for traders under the age of thirty. it reeked of affluence. shiny cars eating food people hitched buns were like only clubs were on god these sums can be invested in complicated vehicles in secret outside the prying eyes of wall street regulators soon all of the traditional

investment firms have been who is no wonder so many of these young people wanted him and at the time. i personally spent five years in a private equity and then made the decision instead of going back to business school to move over to the public side so that was a conscious decision on my part i think most people probably get involved because there is an opportunity to move up the ranks and make more money at an earlier age in hedge funds and there isn't private equity which is the natural progression after a couple years in an investment bank program well if you're going to be in in the investment world the best way to and you're a good investor the best way to make money is to have a hedge fund because you get compensated much compensated much higher. hedge funds were being paid one percent of the assets and twenty percent of the profits in those areas so obviously that was the best way to make money if you were in a good insurance company a i.g. was a leading seller of credit derivatives so

a bank for example like goldman sachs would create a c.d.o. it would stick all kinds of subprime loans and packages packages or packages of them into a package and then it would go off to a i. and had a aaa rating defrosting credit rating in gold it would say you know what you take this package of junk we've just created. kind of insurance you basically write a default swap to basically credit and store it got a much better rating than we do so our investors will buy it from you what that will make money we make money everybody's happy former bank regulator william black told bill moyers this was all deliberate this stuff the exotic stuff that you're talking about was created out of things like liar's loans that were known to be extraordinarily bad and now it was getting triple a ratings now aaa rating is supposed to mean there is zero credit risk so you take something

that not only has significant it it has crushing risk that's why it's toxic and you create this fiction that it has zero risk that itself of course is a fraudulent exercise. in. listening to its crisis. even e.g. made guarantees totaling more than your ability to pay an amount larger than the entire value of the company actually that's a bit of an understatement he i-g. along with others who sold a rivet is and insured their policyholders to tune of an estimated five hundred ninety six trillion dollars compare this to the gross national product of the entire world and the problem should become more obvious so you are just gambling the leonids possibly trillions of dollars. but i would refer to it as gambling with

you know these these transactions were individually individually underwritten very carefully and maybe i can provide some of background see that might be helpful to look at their very good but they were carefully underwritten how come no one wants to buy them how could a i.g. have possibly expected to make good on its promises one thing we know for sure he i.g. executives made huge paychecks selling these credit derivatives to hedge funds and others right up until the economy caved. so we don't need to fear hedge fund i don't think it's a fair hedge funds i think hedge funds provide. a pretty intelligent investor base more savvy investor base for the market. for. the play the wall street used to invest in the american economy into the needs that used its money to

produce goods and services but then wall street became the american economy our financial system was a reengineered through what's been called financialization with banks credit cards real estate and insurance companies as the new power players. capitalism a sort of go off the rails it's ceased to be kapil it's financial i say should the fact that it's now all about speculation the fact that it's about ponzi schemes of the facts about selling and buying paper from an economy of real goods real commodities and real services to a system where people were buying and selling money buying and selling assets buying and selling other firms were no new value was created most sensor b. says the whole system has gone predatory i think we had a transition from what probably was afraid of market system. to something that is

out of control and probably defined as a predatory system frequently in markets that are manipulated for the. maybe a few who are investors investors it's even even that's very difficult to tell we still don't know point fact is making money while so many in fact are losing money on wall street right now as businessweek noted what we're observing in all of its bizarreness is the ancient paradox of what happens when an irresistible force meets an immovable object the irresistible force in this case is the u.s. economy the immovable object is a wall of debt that now can't be paid back in a position where the volume of mortgage debt corporate debt personal debt and even state and local debt is larger than the ability to pay the rise of a credit based economy through the growing disparity between rich and poor has

transferred from the middle class to the upper class the middle class watched it savings literally drop to nothing this every spare dollar when the paying off. the upper class meanwhile figured out how to make money from money more accurately how to sell their dead promise to pay in the future. real estate expert ron silver men calculates the cost you are talking in recent years probably every year transfers hungry. of dollars hundreds of billions on groups of billions of dollars and billions. from the pockets of the poor. who are far better. than their show called victims to go up or one percent. population own thirty percent

of america's returned to wealth that is dividends interest and capital gains five years ago they'd raise their proportion from thirty seven percent to fifty seven percent and today it's estimated that the upper one percent of america's population owns almost seventy percent of the returns to. the percent seventy percent that's huge yes that is it's unprecedented it's essentially it makes america look like a third world banana republic thank you. talking . to the mob the barrister. ironically bear stearns was also the billions of dollars they received in the bill now did not come to the company's cheer holders but to those to whom. it was a deal that ultimately saved the creditors to bear stearns by forcing it into j.p.

morgan at the expense of equity holders michael hudson points out to both the homeowners and corporate america on how to the debt machine many corporations are effectively in negative equity or in and technically insolvent position headed by the financial sector by the banks themselves really sympathy for the demonstrators in the bill. i don't know if there's a lot of sympathy per se to their point of view i mean we were you know in a similar similar boat so to speak a similar boat perhaps only one has life preservers the fact that the government now is funneling money to a major bank and saying if you can do that with a bank why not do it with strapped homeowners facing foreclosure as democrats thanking god was thank you. crisis increases desperation. hutchinson street is leading the move on the

street in a battle for survival we are seeing a second class war in this country such as you've never seen in the entire history of the united states a class a class war except in this case the class war isn't the kind of war the marxist some socialist talk about it's not between employers and employees because employment is going to be shrinking bear stearns fourteen thousand employees would eventually be laid off by j.p. morgan chase it's a class war between creditors and debtors it's going to be a fight between the financial sector and what's called the real economy the economy of production and consumption and the financial sector has prepared and positioned itself to come out on top by being able not only to foreclose on the property of debtors but to get a government bailout for all of its own losses. because

. employment is going to go down market are going to shrink people are going to default even more on their mortgage debts on their credit card debt on their student loans so you're going to have an exponentially rising trend of defaults you're going to see a transfer of property from debtors to creditors a depression not only a depression but an economic polarization it sounds bad yes it's very bad. for. the media was now out in force covering the protests many would not talk to them like that. there was a little bit of myself. to me when i tell so why do you think people don't want to talk to you because they hate you they think the media is part of the problem they. they don't think that you're going to help them thinking about their. urge to die but spend the

first financial crisis it bother to search when was the media when all this was going on why were there so few naming us and not just his gay issues in what was to be common economic catastrophe things are only going to get worse i want to talk a little bit more you've been incredibly pessimistic august two thousand and seven marked the beginning of the end of an era what had gone up was now coming down. foreclosures were up ninety three percent from the year before. in london there was a run on northern rock bank more bank write downs followed billions that few b.s. and citi group fannie mae the largest source for home loans reported a three point five five billion dollars loss for the fourth quarter in march two thousand and eight the fifth largest investment bank in the world bear stearns was

on the verge of collapse many of the nation's most respected financial journalists are still getting it when i get my money out there no no no bear stearns is fine do not take your money i just read if there is one k. oil than the plus four hundred pastors is not in trouble i mean if any are more likely to be taken over don't move your money from bear that's just been silly don't be silly the media was complicit says dean starkman a financial journalist now with the columbia journalism review the business press former colleagues of mine friends of mine did not really recognize and understand what they were up against how dramatically the way the world it changed the lending industry had changes things that you've kind of documented how out of control wall street had become and i think it's a real contributing factor tactic to to how we got to where we are today.

start even compares the journalists who cover wall street to reporters sent to iraq he said they too were embedded but in the corporate culture. the great panic of two thousand and eight is the equivalent for the bit business media what the iraq war was from that for the washington press corps is the national story of the last seventy years so the parallel is fair you could further extend the analogy a little bit to think about the idea this concept of being embedded and that the press corps itself was sort of embedded within a particular narrative. that has its origins on wall street i don't think that analogy is out of whack at all. there was one more factor this few in the media covered because it was about the media about the infusion of nearly three billion dollars in advertising revenues from dodgy lenders and credit card companies

between two thousand and two when the housing bubble took off until its crash in two thousand and seven. benchley an entire industry became predatory predatory like criminal. yet deceptive marketing on a mass scale as a as a function of corporate it started in america and is now everywhere some say the united states has infected the world with a kind of financial aids. the people who these mortgages was sold to. a large majority of these people who are poor black people or that he know people in other words this was targeting minorities especially so this resulted in the biggest transfer of wealth from the poorest people in america to the richest institutions in the world and think that

the majority of people. they feel that this is a problem for as you say this is this is a banking problem stock market problem this is investment problems for their passion it's interesting this is a gentleman says things are much more controlled here but i got to a bank to get my house they really make sure it's the money i think that america is heading for a really deep crisis of i'm told before. you have a you have a deep ideological cultural division you're going to have i don't see that having you know void mess of unemployment you have extreme wealth and extreme poverty and you have an population. that's not the case here i think what we're going to see in the united states i hope i'm wrong but i think united states is heading towards an abyss as the crisis worsened politicians family woke up to realize that the economy

they had deregulated was imploding now chris was finally being asked to act ironically the pitch was made by a republican treasury secretary henry paulson a former c.e.o. of goldman sachs in the years that that firm made massive profits in housing securitization and speculation. when this do so in order to avoid the continuing series of financial institution failures and frozen credit markets that threaten american family's financial well being the viability of businesses both small and large and the very health of our economy the question would government intervention fix the problem or make it worse would it reward the companies that profited from massive fraud who would it lead to more fraud. treasury secretary henry paulson and fed chairman ben bernanke he began a push through what might be called the final plunder the real story was not widely

known except through money into the on c.-span on thursday at about eleven o'clock in the morning the federal reserve noticed a tremendous drawdown of the money market accounts in the united states to the tune of five hundred and fifty billion dollars we were having an electronic run on the banks that their estimation was that by two o'clock that afternoon five and a half trillion dollars would have been brought out of the money market system of the united states would have collapsed the entire economy of the united states and within twenty four hours the world economy was shell shocked congress was given a three page plan in essence it gave paulson total control to spend seven hundred billion dollars some saw it as a power grab others sold to deliberate creation of the crisis to push through a corporate agenda. troll the media enough to ensure that the public will not

notice that this bailout will and get them for generations what was unique was the refusal of congress to hear any testimony from expert witnesses or to have eric billion dollar bailout for wall street is being driven by fear not backed this is too much money into short a time going to too few people while too many questions remain unanswered why aren't we asking wall street to clean up its own mess when we passing new laws that stop the speculation which triggered why aren't we putting up new regulatory structures to protect the investors how do we even value the seven hundred billion toxic assets why are we directly helping homeowners with their debt burden why aren't we helping american families face what bankruptcy why are we reducing debts for main street instead of wall street isn't it time for a fundamental change in our debt based monetary system so we can free ourselves from the nephew lation of the federal reserve by the federal reserve in the banks is this the united states congress or the board of directors of goldman sachs

congressman kusin it's his remarks were not widely reported either they were still refusing to make new loans the oversight of paulson's program was criticized because millions could not be accounted for fraud he has to seat and the essence of fraud is i create trust in you and then i betray that trust and get you to give me something of value and as a result there's no more effective acid against trust and fraud especially fraud by top elites and that's what we have although all the facts are not even about who got how much and under what terms many in the public see the ballots as a way to loot taxpayers as fraudulent as the problems they were addressing. yeah we're brought over to capitol hill but the summer of two thousand and nine the crisis had not abated unemployment continued to climb foreclosures to mount

bankruptcies to grow markets to shrink firms to fold and tensions to tear apart families and communities i think you will see a bunch of people get died it gets our first senses more importantly that the bigger question to me is will we see a structural change we go through blog bad recession while we waste our money struggling to rebuild that odd sustainable system that should have never been erected in the first place because new regulations were beginning to be put in place trillions had been spent by government on stimulus programs these measures were clearly not enough so-called reforms often pump money into the very institutions that caused the problems the bailouts benefited the wealthy deficits and debt grew by the trillions it became clear that the structure of our economy has yet to be transformed took over the star search. in june two thousand and nine

president obama announced new financial reforms saying the crisis was caused by mistakes. minute recognizing the government's inability to police wall street investor jim channels says his reforms are doomed to fail and it's a little bit tough because the the guys who are the bad guys are one step ahead of the of the cops on the beat every single time for starters we need a full investigation like the one that followed the great crash of one nine hundred twenty nine we need to know who benefited from one of the most insidious crimes in history how did wall street's wizards engineered this disaster and who is complicit with them who the big fish ever be prosecuted the media too has to wake up to shift the debate to include the new. made for deeper change and a crackdown on white collar crime since this is my film i get the last word this financial crisis will not be turned off like

a light switch millions are struggling to survive as conditions get worse. for you to get you straight to jail. and everything can lead to the same people something. created there was all lot of partying there was a lot of backslapping there was a lot of extract a lot of extraction should lead to a major reaction. blunder in an age of major structural change or will there have to be an age of protest and pitchforks first. to. food.

banks talking. to. experts. we call the sun. and she. loves. one. prime.

time taking on it we. talk. on the company to talk. to the owner of. toxic assets. toxic. 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 everything you thought you don't know i'm tom harpur welcome to the big picture.

book. wealthy british. market why not. come to. find out what's really happening to the global economy with mike's cars are there are no holds barred look at the global financial. take three. three. three

three. three

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