good afternoon to welcome to prime interest i'm perry and boring in washington d.c. let's get to our headlines. paul volcker made some controversial statements yesterday in the act but i'll reserve chairman who is most famous for whipping inflation then by raising short term interest rates to twenty percent he criticized bernanke he's pedal to the metal bond buying saying that there are risk of inflationary potential and speculative distortions he also said central banks tend to be slow to remove stimulus no kidding. but we do enjoy our central bankers talking tough from time to time and don't fret viewers because if you're a former general and cia chief who resigned in disgrace well there's still

a way for you to cash out another revolving door david petraeus has now joined the private equity giant hey are following in the footsteps of james baker the third in dan quayle the move to the lucrative private equity field will help him happy to live on his substantial connection and according to bloomberg a former general will be chairman of a new entering the institute focused on macro economic forecast public policy advice on investments in emerging markets and community. but we do know that it was his communications with paula broadwell that got him in hot water in the first place. let's get to what's in your prime interest.

on how we live in the futures and the street was rocked by the failure of a mid-sized brokerage firm which was forced into liquidation and bankruptcy. former goldman sachs c.e.o. and former new jersey governor and senator had made highly leveraged bets on european debt with our money as creditors became increasingly concerned about m.s. global solvency they demanded more cash and collateral but when the dust settled one point six billion dollars of customers fines was missing and these were not investors who had decided to risk money on the firm these were customers who simply put cash in securities on deposit with m.f. global to secure trades former f.b.i. director louis freeh he was appointed the trustee over the parent holding company

is suing john corazon and demanding a jury trial something that's pretty unusual for a bankruptcy case i talked to earlier today with john breaux co-founder of the commodity customer coalition as well as prime interest producer bob english and i asked john what's the strategy with free demanding a jury trial for corazon and here's what he said. if you're more for. the program the artwork and. everyone. over. here. so it will be kind of the.

more. they thought so class action suit against a people are getting money and david morgan recently settled can you explain the bank sprawl and that's global and what the settlement means for a possible. well very simply the development is good news in that war money is coming back to the states to copper and it is instead of going to be years and years of litigation with the geisha coffee to weigh in the recovery that is good news was j.p. morgan's role is going to flow as they were essentially on every possible side as a creditor they receive customer transfers in the final days of the global. order apparently the word zionist according to. a rational. and i truly sort of work the start of customer

money. misuse for where they were going to and j.p. morgan is on. record all the company how many different power or global. the contrary to count with just savings they should've know that money was coming from customer bosket fund and the whole private fund they received it back they drive. drunk or design and is forever. secure the overdraft self. and what that all means is that the bank had vested interest in maximizing for congress as a creditor. services and they will lose further than that with recovery for cochran. we think they overstep their bounds and trust the m.f.g.

. magnus's. negotiating with j.p. morgan to maximize the recovery. and i think. we're going. to be good. and we. are. going to. think that the consumers are being recently i'm saying that here. you know they are going to get one hundred percent of their money back no and i think john will agree in the early days of after the bankruptcy the customers were just left in the dark and that's one of the reasons why john and james go to is founded the commodity coalition that they did the c c c it's the customers are going to get one hundred percent of their money back but are they going to receive interest on it it's clearly taken a lot longer than it should have and that gets back to the bankruptcy and

liquidation structure and just to get that get to that first second you know the holdings company filed for chapter eleven and that is basically for reorganization and chapter seven would be a liquidation so a lot of people are saying well the holdings company should have filed for chapter seven because at least then the executives would not be able to run the show and they ran the show until louis freeh was put in charge as a trustee and then the broker unit well it was put in the city quickly they should which is for securities customers not futures customers well there's also another name here gary gensler he's the chairman of the c f t c he conveniently recused himself from the entire matter after bankruptcy filing now he did work for goldman sachs and. john corazon head of the firm in the late ninety's but according to the c f.t.c. is obvious have inspector general he was advised that he didn't have to recuse himself and that's global's customers were left in the dark and looks like he was basically an absentee landlord as m.f.

global just sunk so what's the significance of this are poor and can we expect any . well changes as a result. well i hope that we'll see some changes a figure. placing so clearly articulated rules for what happened in britain that has now arrived but i obviously don't for we why have regulators you have experience in the marketplace be dull just walk through all of the capital bill or really little of what we do want people to use that device for work and investment banks for fresh. with a little need this this was a venture exteriorize in the future it will need to have clearly articulated moment but when you shoot it where should reveal yourself now with the message i was like mr gensler refutal there's more aren't good enough people that we get. the inspector general's office well maybe not so much. i don't i'm not sure because we

won't know the full details of exactly what happened in that period there until after one of our justice is to move ahead with the credit also proficient or not and a lot of the stuff comes out but at the end of a what it means is this is the regulator approach when they shouldn't be allowed as operated out of all the companies to go ahead and go into chapter eleven. court management is not aware of any shortfall several days after it was very clear they were not and they know that shortfall they knew it involved bob and then they knew that they were actively working with me to try to go into bankruptcy that we're going to work so i mean i want to investigation into how it happened and how all the going with the middle man chapter eleven or so on which are as a nation west that we we want to be stuck here has got them i paid wires is bought for monetary purpose and yet our last one for feeding into chapter seven it doesn't

belong chapter eleven and of course a year later that's exactly what the creditors all got when. there's no regulation firing and you know what people are going to be my hero who are. you know. there are you going. you know next. year he may be you know we're back. with more people who've got a market who are you sure. you know workers. well there is speculation that gary gensler might not get a second term partially due to the failures of and that bob what do you think of all this i think that gary gensler was compromised but not necessarily because he used to work for john corazon and he didn't even work in the same general area scores and so i do think it was a little bit ridiculous it was a cop out that judge that he recused himself now he was working heavily on swaps

regulation at the time and people have to understand that it was a big coup for the c.e.o. to see to be able to regulate a big portion of the seven hundred trillion dollar derivatives industry and that was really his focus i don't think gary gensler really cared about the futures in history that much and that's what we saw when the like you said the c.e.o. to see was kind of an absentee landlord in those early days and this the f.c.c. is top regulator and this is out for we out there is a set of fire congress you know which might open the doors for the opportunity to see change here and you've said you know there is you have enervate of way to to make more customers protected if there's another m.f. global can you talk about your plant on. agreement that you are. great with very very deeply here. are they work together.

and the safety and everything because the well in reality is on running money for customers are they in general read or is this day and this is the and this it was as if the nine year old. being mean to disparage threw her totally meaningless there was a. little money left in the state got to go to pay back that shortfall for well in ninety nine there was an s.p. underwent a bankruptcy with a shortfall very small and phrasings nominated and the judge ruled. the executive the statutory authority figure in the making of rules that if it was an event was a dream article about a president but is out there and there's a whole those people say well you gotta fix the priority here but they've got to go on bankrupt because you're going to get all these pastries law is involved in

a lot of committees on jurisdiction and you didn't know what it's going to drag my knowledge on for a while we were back receive maybe this particular issue mexico fully understands the concept of death or if you're secured creditors which you agree hey i'm going to gordon my bet the stockholders he said we're going to do that preside over a stock or we'll get money back or you will so our plan is to put a provision of this money into active forces. to subordinate various groups of working all their affiliates to the customer also or his creditors and work. to the customer on the desk so maybe that was you had nobody except the lawyers would have more priority that the customers. that would be john rau co-founder of the commodity customer coalition and prime interest producer bob english stay tuned because as next i'm going to air my exclusive interview with the bitcoin conference

which brain health c.e.o. gary and we get to the top of regular toys. environment around virtual currency of an exchange and then bob and i are going to do about a fleet of rock concert in spain very. children from want to financials and have a special say as how it's going to. just mama. the child shouldn't live in the north an inch for a long child should be raised in a family during these years a little eleven children have been returned by dumb to the families. of the ninety eight percent of the children from zero or more from each placed with

. the child has brought us so much happiness. let me let me respond well why don't you let me ask you a question. on this man working his way around in the debate we have our knives out. to bring in the scientists by staying married to get married a situation where b. i don't want to talk about the surveillance me.

when i visited the twenty thirteen point conference in san jose i had the opportunity to sit down with jared khanna the c.e.o. and founder of trade health which is the first u.s. big exchange platform as you may know virtual currencies are entering a dance regulatory environment here in the united states i first asked mr ken what are the f.x. federal and state regulations and know your customer laws are having on his exchange. and it depends it depends on the amounts you're trading and what not a trade deal we're really focused on compliance that's that's our priority so we don't do any trades unless you verify your identity with us you know you can come to our office in san francisco and verify in first in we have a notary that can make a copy of your identification or we can use online services as well what are the

regulatory requirements to operate an exchange outside of the u.s. but u.s. customer ins so it depends once again on the state but. federally you're supposed to register even if you're operating in another country and for example city california if you have employees are should say officers in california if you have servers banks or customers in california you need to register with california so they don't operating outside of the country is not it is not an excuse as far as the u.s. government's concern and even if you are registered for example with f.s.a. in the u.k. they're still going to want you to comply with u.s. laws if you have american customers so there are. there are and they're at risk for prosecution by the u.s. government if they don't comply with u.s. law. what i mean is based in japan. and they were just they just had fun seized by

a department homeland security and there's other exchanges that are operating in europe and south america as well. does mt gox having serious competitor i know now they're facing off for the challenges but i guess maybe before i've been seizure in that they have any serious competitors in the market space and. i think they've got about sixty percent of the market give or take right now so there was some some pretty serious competition from from bit stand trail we deal with high net worth individuals and people are looking to buy and sell large amounts a big point so we definitely compete with them in that area what are your clients look like are what it was the demographics of your clients most of them or individuals that want to make high risk investments or hedge against their currency risk with you know the dollar or the euro so it varies from you know some some libertarian types that you know want to put you know fifty thousand dollars into it or the other day i had a billionaire walk in and he said how much can i buy you know he said you know can

i. put five million in here and just he just wants to get away from the dollar. are you seeing that as a trend oh yeah for sure these seas are jumping all over this d.c.s. they're used to high risk investments with high returns you know you look at you know if you if you got into facebook years ago you knew it was either going to be a big success you're going to see this huge return or you're going to lose it all and they're trusting other accustomed to seeing giant returns or losing their investment. how do you feel about peer to peer lending and some of these social lending bangs do you see that as a child as well as the more v.c. is getting involved in these types of. investments as well i think i think that's going to continue to grow and i think i think that coin helps enable that because you don't have to go through traditional banks do it its own system that's easily integrated with i think peer to peer lending and back point i mean i think you can

say some of the same challenges of having to deal with all the state regulations and are you guys working together at all with the critic you're listening to. going to be with me yeah not any specific companies now can you see any correlation between the two. for sure i mean they're both the roads emerging technologies that enable people to really you know control their finances you know in ways that we're not we're not accustomed to normally when you when you want to move a large amount of money you go to the bank now you can use because when you want to loan money to someone normally you would go to the bank so you can bypass the entire thing. is wall street or any of one to any of the big banks are they entering that bank marketplace at all. not that i'm aware of there is there's i have talked to senior people at banks that find it really interesting and they're definitely looking into it and they're really trying to decide what they're going to what they're going to do but banks are traditionally very slow to move on on things like this do you think they see their point as a right and all i don't i don't think they're going to see it as is this threat i

think right now they're looking into it and to see to determine actually how useful it is for for criminal activities and you know if it's something that they can control when i when i talk to the banks to look at it they say you know how well can we trace back the path of this money the source of funds and whatnot so right now they're just they're just studying it trying to figure out exactly what is good and isn't good for and if we did start to see some of the big banks enter into this marketplace way areas you think they would emerge and for. more investing and big point there and maybe a company or i would i would. i would think that they might use it for international settlement initially because it's a it's a much easier system to settle between banks they could piggyback on the top of it they don't have to necessarily actually send coins but you're talking about changing a system that's been around for one hundred years you know it's the wires or you

know based off telegraph you know this is this is nothing banks are you know it's very silly slow to change so. i think the first thing you're going to see is some some venture arm of the bank is going to kind of you know put their feet in water and with with the company and you know get involved with it invest in it first they're going to you know offer you know secure secured banks like our i'm sorry solid account relationships with bitcoin starts i think that's how they're going to get they're going to it's two different for a bank to adopt it they're going to have to just get involved with start ups and i'm talking about this mines here and that's one of the big banks they're. operating off and things like we really have a global sphere man across the world where do you see this going and you think coyne plays a part in it and. i think. with with what's with you it's been happening in countries like cyprus it brings a lot of attention to decline i don't think there's a lot of people that are fleeing you know greece and cyprus to buy big coins but

what it did is it really brought it to the forefront and it really showed people that there is an alternative that they can't just tax you on a just remove your funds so i've had a lot of people that are from greece and are from cyprus but they look at it and they say that really scared me you know now i want to i want to look more clean. and that was my interview with jared cannot the founder and c.e.o. of trade how. and it's time for the daily deal this is perry and tell me why you see bon jovi in my notes explain this ok well one of the recession hit countries in europe us rock

band bon jovi is essentially going to play a free concert in madrid spain spaniards can afford to go there because we can't organize originally have left spain off the tour list because they fear they would not be able to fill all the seats with the high rate of unemployment so bon jovi just said he would sell the tickets at cost to the spanish fans but i don't know if this is fair to the other countries in europe have to pay full price for their tickets while spain is getting out of what do you think i guess it depends on how much you like jon bon jovi i mean what do what is he going to do if you go to cyprus maybe you can just charge them but i think it speaks to a larger problem in europe which is kind of structural the way the currency system is set up in the fiscal system is set up i mean what do you think well i think this brings up you know other issues in europe where the more conservative countries such as germany are having to live within their means while all the pigs are benefiting from the inflationary measures so we're talking about portugal ireland

italy greece spain etc but these countries are part of the you are part of a unified monetary system but they don't have a fiscal core in other words all the things that the governments do to pass regulations that governments have their own bond issuing systems they're not coordinated so they have this problem that is developed over time where the pigs the so-called pigs i like to call them the club med states they can borrow at german rates they can borrow at very low rates and then they can spend that money so there is a structural problem here but is the solution really trying to create a politically unified europe i mean what they could do is just go back to their own currencies and that's really the issue that we're talking about that. that another issue in portugal where some economists are starting to gain traction in calling for their own currency and then the book why we should leave the euro made the best sellers less important all but leaving the euro was a very taboo issue in portugal this book has helped spark a public debate. it's been debated in greece and the thing is if one state

pulls out of the euro there's going to be a floodgate the powers that be cannot afford to have that flood gate open so there's going to be a tremendous amount of pushback i don't care how many books you sell in portugal you're just not going to be able to gain traction and trolled there is a true implosion in the financial group a new financial crisis and we haven't seen that yet and there was a poll taken in portugal is that only twenty percent of the people support pulling out of the year because they're still benefiting benefiting from it in certain ways there's a lot of inertia there's a lot of traction. things have to get worse before they get better very well thanks for joining me bob if you want to follow us you can follow us on facebook at facebook dot com prime interest and also on twitter at perry an artsy and. english. thanks so much.

it has been unfair day on prime interest we discussed the tragedy of m.f. global after john corazon demolished the firm and while so you have to use the officials turned a blind eye when we dug into the legacy bank regulations which are a century old that are stemming the tide of an invasion and it might not be fair that spaniards get to hear the new jersey rocker on the cheap will everyone else plays by. price there is in kosher that general petraeus is cashing in and others gamble is communication but hey if you look up player in the dictionary you won't see any reference to life so get over it if they were watching come back tomorrow and carry on boring it this is a prime interest of a great thanks. to

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