or are. a way. good afternoon and welcome to prime interest i'm perry i'm boring in broadcasting out of washington d.c. and here's the prime stories for today. the fed is getting it wrong that's the charge the leveled by john hilson wrath of the wall street journal he korea correctly states that the fed has overestimated how fast the economy would grow and every year since the financial crisis the implication is that the fed might not wind down q.e. asked in this thought and that's not the only indictment from the w. j. they surveyed surveyed forty economist on why wong term interest rates recently spiked twenty six of them said as chairman bernanke and co in his tapering talk the survey also found that recent hands of scaling down at the eighty five billion dollars per

month q.e. program has kept a few market participants the averages survey grade for communication on a scale of one to one hundred sixty two nearly half a by most academic standards and the latest housing data released this morning by the national association of home builders was the strongest print sense two thousand and two and the first time it's been positive it says two thousand and six that's when the last housing bubble was in full effect the bottom line home prices are getting more expensive and so are mortgages thanks to rising interest rates so you soon as wednesday when the fed attempts to reconcile all of that. and here is what's and your prime interest.

austerity oftentimes has a negative connotation and scaring many about underfunded government programs and calls for higher taxes we are starting to see harsh debates over bloated government budgets across the debt rating countries including the u.s. and europe i spoke earlier with dan mitchell from the cato institute who embraces austerity and doesn't think we should be afraid of it i first asked him what forms does austerity come in. there's a big debate because austerity means different things to different people to the i.m.f. and some of the european countries austerity is simply a buzzword for higher taxes oh we have to deal with our deficits and debt so let's raise taxes because of course none of those politicians want to control their budgets on the other hand you have these keynesians out there the paul types who

say austerity is bad and they think you stimulated the economy by having even more spending even though of course countries like greece and spain italy got into fiscal crisis because they were spending too much already so this debate to me is like the iran iraq war i want both sides to lose because i want lower spending and lower taxes so i don't want to choose to keynesians who want bigger government and i don't want to choose the i.m.f. who simply wants higher taxes and senator patty murray she said that our he said our she said that the case for us territory and time of economic weakness is simply wrong and then the i.m.f. further stated that immediate spending cuts would likely slow the economy you can we just talk about what is the difference between short term and long term effects on the economy as it seems like some of these people are taking into effect term consequence is that keynesian economic theory is very much fixated on what's happening in the economy in the short run and they think that the government by

spending money or to be fair sometimes they say by cutting taxes but the whole thing is they want the government somehow to put money in people's. pockets so that those people would then go out and spend the money but what they conveniently overlook is where does the government get the money in the first place if it's going to send everybody a check for five hundred dollars obviously it has to borrow that money from the private sector so anything that they came the answer putting in the economy's left pocket they first have to take out of the economy's right pocket so that's the short run problem with keynesian economics the long run problem is when do they actually impose the fiscal discipline themself thought that the government should run deficits when the economy is weak but then run surpluses when the economy is strong so in theory you could be a small government keynesian in reality though keynesianism simply tells politicians that their vices are virtue you leg overspending well here's a theory that tells you that you're doing the right thing and that's why whenever we look at so-called keynesian stimulus throughout history the politicians love the

part about spending more money but they never get around to the part about being frugal and restraining the growth of spending when times are good which is why of course all these countries all around the world are getting into very deep trouble begins they never get to the long run rate and it seems as though that the i.m.f. backing up its support for austerity i mean what is the significance there is then and why it. and what examples have they shown and the international monetary fund in theory is supposed to be the cop who monitors everybody's finances and make sure that they don't get out of whack somehow and one country is wind up getting into trouble as the i.m.f. that has to come in and write a check figuratively speaking to put them back on the straight and narrow but if the i.m.f. is in effect bailing countries out it does want them to make sure they get their finances in good shape now in my mind they do that the wrong way because they say

ok go ahead raise taxes i think the real problem is that these countries are spending too much in the deficits and debt are just a symptom of the i. methinks the deficits and debt are the problem i think they have symptom and disease backwards but the point is that at least they sort of understand in the long run two plus two has to equal four. and unfortunately in recent months the i.m.f. has now backed away from that position and what that does is it sends a signal to some of these profit governments around the world day maybe we can still get i.m.f. money or european central bank money or european commission money we can continue to spend so it's like you're bailing out your friend but you're telling your friend you can't go out drinking every night and all of a sudden you tell your friend ok i'm going to continue to bail you out but you can go out drinking five nights of the week that doesn't make sense and so i think what the i.m.f. is doing is a mistake not that i think they were on the right side in the first place. where are most of the european countries what are they adapting as their austerity

measures i mean we've talked about tax high reducing government spending it's a combination of all that there is there one down strategy that we're seeing in europe there are some what thirty something countries in europe we're seeing thirty different examples but if you were to sort of put them into broad categories most countries in europe all during the first decade of the century they were increasing spending they were increasing spending before the financial crisis hit just because they thought they had plenty of money to spend and then once the financial crisis head then they said ok we have to be good keynesian so they increased government spending on that basis but then the financial crisis morphed into a fiscal crisis meaning that investors no longer trusted the greek government the italian government the spanish were not going to lend the money because we don't trust that they can pay us back and so as a result with initially some help from the i.m.f. these countries start raising taxes which i think was a mistake but they also slow down the growth of government spending so that

describes a lot of southern europe the baltic countries a stonie a lithuania lot the i think there are the star pupil of the class big way back in two thousand and eight they saw themselves getting into trouble and what did they do they cut spending and i don't mean cut spending in the dishonest way they do it in washington oh we increase spending six percent instead of eight percent so that's a two percent cut no and estonia latvia lithuania they spent less in two thousand and nine that they did in two thousand and eight than again in two thousand and ten they cut spending and now these countries are growing again they did the right thing they cut spending yeah they had a few tax increases but very small so i think the baltic countries are my success story of course the real success story is switzerland because they have this thing called the debt break which is really a spending cap and they never got the problem the first place where we have a graphic to get from your blog but it was also from your stats and it shows that the pair eggs. they have not addressed spending cuts can you just address what

makes up the bulk of the budgets of these countries who are completely debt ridden . the problem the pigs of course portugal italy ireland greece and spain the pigs they got in trouble because government spending rose very rapidly during the last decade and then they hit the fiscal crisis and they have actually slowed spending down compared to how fast they were increasing spending and greece has actually cut spending over the last couple of years and of course they also raise taxes hand-over fist and that sort of their private economy because it kept getting hit by taxes it's very hard for them to grow even though they finally have begun to control government spending but the real problem in the pegs and also it's the exact same problem in northern europe is the size of government you asked what are they spending money on the overwhelming share of the budgets in european countries and also i'm afraid to say the united states is what's called transfer and consumption spending and what does that mean it basically means things like

entitlements and just do the run of the mill government programs the things that actually can contribute to a better functioning economy that the government does rule of law property rights and honest court system physical and human capital highways and education if it's done correctly can be productive for an economy so i'm not making some sort of anarchist case that all government spending is bad the problem is in europe this much of their spending is for the things that are clearly unproductive and this much of their spending is for things that could be productive and that's what europe has to address is all that transfer and consumption spending the welfare state to put it simply over evenings back to the united states there's a lot of debate around bass. saying it's. a committee the senate budget committee hearing or senator whitehouse he challenge the testimony of a heritage employee about where he had came to on measures we have

a video from that. dr i'm concerned that your testimony of this committee has been meretricious. and i want an explanation i want you to sit down and do it in writing so that we have plenty of time that there is no question about any short cut that you might have taken if there wasn't time for this discussion and i want you to explain how this all we see that shows not the majority by o.e.c.d. terms over and over again of their austerity plan with spending cuts and senator whitehouse they have using metal leaving dad. the heritage employee he used once at a set of. data that showed projections while the senator was looking at a different set of data but you stated that they didn't even address the underlying are you mad so what is the most important argument they should be interesting if they just figure pointing at each other well i suppose first of all we have to give senator whitehouse credit for using a fancy word like meretricious that's

a this is a very very rhode island way of accusing someone of lying but i think heritage was right on this and senator whitehouse was wrong why biggest senator whitehouse was using o.e.c.d. data that was based on what politicians said they were going to do in the future whereas the heritage economist was looking at the actual we see the data from two thousand and seven through two thousand and thirteen so i think on that little fight we saw on capitol hill yes there were two different sets of data but if you have a choice hard numbers based on real actual what's taken place versus what politicians say they're going to do between now and two thousand and fifteen which is what the senator was relying on well maybe the o.e.c.d. countries will do what they said in this survey that the o.e.c.d. did but i don't trust that i mean does anybody out there in the audience trust the politicians are going to control spending in the future the way they always say it's like you know what was that famous line with the oh good lord make me chaste

but not yet that's what these politicians are like they always promise fiscal discipline in the future but in the present they love to spend money and it was the actual real world historical data that the heritage foundation guy was using and senator whitehouse was then looking at this projection. and that was senior fellow at the cato institute dan mitchell and stay tuned to find out who was named of the best senator by economic policy journal dot com and you can't vote and then bob inglis and i will head to the daily duel it's revealed the latest beta projects from google that delivers the internet to the way and up the board of the race the right. mission. couldn't take three months for charges three.

months three. three stooges free. download free blogging live video for your media project a free media dog r t v dot com. let me let me i want to know we're going to let me ask you a question. here on this network as we're having the debate we have our knives out. believe in the subtitle to spank staying there or getting married at the rate would be an ideal way to talk about your mail and me .

and the best senator and the united states. and according to economic policy journal dot com it is paul strauss as the nine of voting united states senator from the district of columbia he can do no harm so who is paul strauss he is the u.s. shadow senator from d.c. he does not have voting rights in congress he does not have a coveted office in one of the three senate office buildings no word as they serve on any committees instead he spends his time lobbying congress to admit the district to the union as the fifty first state and here to refute these claims that he is the best senator because he can't vote is the man himself shadow senator

strauss now mr strauss you said that you were flattered to be named the best senator in the united states even if it was kind of a joke by you p.j. what was your reaction when you found out well as excited as i was to find that economists with a sense of your i had to demand it really hard right very very hard to fall. and so it was i did get a kick out of it especially because when i clicked on the link i had no idea that i was actually even being considered let alone going to win such a coveted title what a wonderful war and and we also saw that you were not child in the best senator but it said you were the most handsome who waved coat what to you in fact your blogger profile name is not my blogger profile name you know what are the couple rules you live by you try and wear seatbelts you don't add salt and if you don't read internet comments in the section you're going to live a longer happier life so i hadn't really focused on that i think that's probably as

wacky a title as being the best senator based on my voting record but in this business when politicians are subject to so many attacks and barbs you take the love where you can find it so now i totally understand that we get some interesting comments on our pages as well but we welcome them because we fear your feedback but you also said that if you were a voting member that would be unlikely that you p.j. would give you this award you'd be willing to give all that up if the fact the district could have told federal representation so as d.c. saddo senator tell me a little bit about what you see you get statehood for d.c. well working hard to get statehood for the district of columbia it's really a moral outrage that over six hundred thousand american citizens are denied the equal rights that their fellow citizens washington d.c. residents are serving in every branch of the military they're working serving their country in various civilian capacities we contribute we pay full federal taxes over

four billion dollars pumped into our national economy and we are denied the basic rights of american citizens so i spend my days trying to change that it's in our age it's unjust it's really un-american and we look forward to the day when we can get not extra rights not special rights but equal rights for a fellow citizens that's quite interesting. that in the heartbeat of the country the people here don't even have representation and in the senate and in congress but on the other side the district of columbia their council has been just riddled with corruption unfortunately you know former council member michael brown he just pled guilty for bribery and you admitted to setting tens and thousands of dollars in bribes he's now possibly facing years in prison and this is just one example only three of the thirteen council members are currently under investigation and i mean how has the district leadership proven that they're ready to be have the

responsibility to come along with being a say well public corruption is a horrible thing when it happens when an elected official betrays the public trust they should face the most severe consequences michael brown but the district of columbia down as so many elected leaders from around the country have i mean in the state of illinois for example they talk about building a governor's wing in the penitentiary because of all of the issues that have affected that state but nobody ever talks about taking away the state of illinois right to be represented in the union. there's been an instance where an entire elected legislature from in a spot in california was indicted and that wasn't for taking bribes that was for acts committed in the official course of their duties nobody's talking about disenfranchising the state of california or any of those communities so it's sad when it happens at the same time there is a system to hold these people accountable and the district of columbia shouldn't be treated any differently i think on the whole we do

a good job of running the city and i think we have a lot to contribute as americans right and that's a very good point but d.c. haven't necessarily had the best track record when it comes to managing their finances either less than a decade ago the district was in so much debt that they asked congress to help out which wanted to be congressionally appointed funny. the control board which took almost all the power away from the district by j. and put it in congress i what does the district budget look like today and just because the city haven't necessarily always been in the best place financially should we deny the district statehood for that well the first answer is no we shouldn't but one of the reasons why the district has financial challenges is the structural imbalances that come from not being a state we can't tax revenue it at source like every other state in the union we did have a control board it was a lot like the control board that was based in new york in the early days of new york's financial crisis there's a board right now in detroit that is handling the affairs of that city so again

financial control boards are new to the district of columbia or any other place but i would tell you that when i first got. elected in one thousand nine hundred seven we had a federal government under the leadership of president clinton that had a huge budget surplus two wars and disastrous economic policies later we are basically broke as a nation the district of columbia on the other hand is in some of the best financial shape compared to just about any other state the union we have huge budget surpluses we have a robust economic growth despite some of the most challenging economic times so in actuality while cities and states have had various degrees of financial management none of them have ever impacted adversely their right to participate in a democratic society if you were going to judge the district of columbia by its economic barometer it's been a very very positive trend and that's despite having a very very arcane budget process where congress actually has to take not just the

federally paid tax dollars but our locally raised money and can overrule any time the wishes of district of columbia let the leaders it makes budgeting difficult it makes forecasting economic policy difficult and i think our district leaders despite all the challenges have done a very good job ok well thank you so much for joining us this is the d.c.s. saddo senator pasta. and it is time for the day when. you feeling ontological existential i don't even know that we're. getting hot. it's been a day of hot air here of prime interest but let's not jump the gun let's talk about goldman sachs all right well it does too big to fail this all only five years since

the financial crisis began. yes it does act according to author simon johnson and read the latest squid report on bond market pricing don't worry we won't report that's what i said vampire squid. well there's been some interesting questions and i think yes it does ok all the big banks and their lawyers david spoke and some other groups they're pushing back against this idea too big to fill in naples the banks to make more money but they're not even acknowledging that too big to fail exists because and that's ridiculous right because a lot of these firms have been systematically important financial institutions subsidies and goldman itself in this report finally acknowledges that too big to fail exists so well if you ask david stockman he said it's all made up well you know david stockman says a lot of things

a lot of with with which i agree but i would say on the goldman front it's pretty interesting because in two thousand and eight they weren't even a bank they converted to a bank holding company and they were right they were they were a broker and they converted to a bank holding company at the end of the year and that was to be able to take advantage of that liquidity and the even got to change their fiscal year from i think it was in november to december and they skipped reporting in the entire financial the entire month they just didn't report so anything having during that month a lot of shady stuff i don't know if we can only speculate that maybe it was just something something. who knows well moving on it's called project a little and it's a little loony a division of google titled google x. project which is the high risk research arm has started this project project in about two years ago now what they're doing is they're watching solar powered balloons into the stratosphere sixty thousand feet above sea level to bring

internet to many of the under internet connected population what does this kind of remind us of maybe it's. bring in the under benton the young bank into the financial system which is something that we've been talking about recently and most of last week we had a profile on the center for financial services information and these are guys that are funded by shore bank and the ford foundation and they're trying to be bring those into a cashless society. and that is what's so bad about that well i mean in a casual society everything can be tracked it's not that cash is bad per se but it just gives the government heavy handed ability approach to you know monitoring our payments and what's going on that's a very green of you you still want all the paper trail you know it's not in terms of a paper trail all i'm saying is that sometimes using cash isn't necessarily a bad thing well we'll see how it all unfolds so. thank you so much for joining us today if you want to leave some comments on facebook we're at facebook dot com

slash prime interest you can follow bob on twitter at english p.-i and you can follow me at perry and r.t. bob thanks for the one i do. and it was a day full of hot air at prime interest but not from us we promise first the fed minders were in full damage control mode blowing smoke through that w. as apparently when you gave at the face of the most transparent fed chairman history when you think of the bearded visit and up up and away bird housing and it's the norm housing bubble to point out but this time is different the feds

promise a never mind the talking heads of the i.m.f. austerity work at least for those who and jose it and. regardless of what you think of congress shadow senator strauss isn't going to filibuster anything any time soon finally as the loons of the non hot air variety that are carrying the internet with the in and out mutiny even farmers they get their pay for god come on thanks for watching come back tomorrow from everyone at prime interest i'm perry and boring have a great night. play

. such. a. low to. play a. player. playing . god how was.

it was. cold smiles and handshakes at the g eight as the u.s. and russia admit they are not on the same page on how to solve syria but pledged to move towards a diplomatic solution. plus a somewhat icy atmosphere at the summit off the revelations that british and american intelligence spied on g twenty members back in two thousand and nine. there are more u.s. the violence leaks to come as a pledge by whistleblower edward snowden in an online q. and a where he also said that news all need to be declared a try to washington whole.