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good afternoon welcome to prime interest i'm perry i'm boring and i'm bob english it's your headline. it's official as they see capital is toast that would be a stevie cohen's hedge fund which posted in will profits of over twenty percent and once had fifteen billion dollars under management a grand jury indicted the firm alleging securities and to wire fraud and the had to find it may have to his or her hundreds of millions even billions in profit but when mr cohen is not himself and i did in fact the indictment doesn't even contain his name he simply referred to as the as a c. owner so it looks like he pulled the chords on for no but he made for. civil suits

from the investors that may not get their money back by the way the soon to be defunct hedge fund accounts by some estimates to be ten percent of daily stock market value at the new york stock exchange don't worry though high frequency traders have promised to pick up the very end boring breakstone insider trading later in the show and i'll do so so it's on the very same topic but it won't be boring and with all the talk of tapering quantitative easing someone has decided to quantify just how much abandon money branding had to give was corporate profits according to the director of market strategy and a brokerage firm in new ads that's about forty seven percent of the earnings of the top five hundred companies in two thousand and nine he said q.e. is like an athlete on its steroids day and lance armstrong can get his tour de france titles and for doping maybe we could apply the same strategies to his chairmanship finally the super rich are heading for the exit in switzerland after getting burned by swiss bankers who sold them out for authorities for tax evasion

hundreds of billions of francs like police switzerland not only are they withdrawing cash but they're doing safe deposit boxes the most important in the story though is what they're doing with their tash according to the spiegel story they're investing in fine art fine wine and classic cars so gold isn't the only safe haven always follow the capital and right now it's an exit from cash we'll talk about the eurozone debt crisis with author and professor like this in just a minute. and here is one thing you are interest.

euro zone sovereign debt reached an all time high in the first quarter of this year this is despite major government spending outback's now today the i.m.f. said that the further central bank interest rate cuts might be necessary so what needs to be done to spark growth in europe earlier i spoke with the army but vikas a professor of university of athens and author of the global minute or no i first asked him about the most recent version of his article a modest proposal for resolving the eurozone crisis is what he said. at this stage of advanced disintegration that it finds itself in is because we have four cracks that are intimately connected to one another where the banking practices as a result of the fact that we have a common currency. a completely separate banking systems imagine living in the united states in two thousand and eight that the state of nevada had to salvage their banks about. and the banks and that along with it and that would have caused

a domino effect destroying the whole of the dollars of the united states of america so we have to do that. the second price we have is it creates a problem that we have a common currency but we have what i call the but in support of perfectly set of all bets so every ural dept in the euro zone belongs to a single company unlike the united states where you have a common currency and you have a common dept in the form of the federal governments that in you have those no that whatsoever which is which sounds like you know from and what at least the point of huge sums by each of her debts but when you have a situation where you've got different states that belong to the eurozone and they don't have a federal. government or for that matter but if it goes of a central bank to back the map at some point when they can't for some reason and of course that isn't what's the major crisis when it comes to finance their depth

they're completely deaf isn't the only thing they can do it just go bankrupt default but that set off a chain reaction of defaults that will bring down the whole thing so we need a common only good for the models because it suggests a very simple way of the central bank of europe the e.c.b. two could. do act as a go between member states and financial markets. getting loans on the behalf of mt but got us there and having them them service. certainly we have an investment so because. you always happens happens it's happens everywhere when you have a financial sector implosion like the one in two thousand and eight. commonly crisis when crisis goes from wall soup of main street the first casualty of course is investment best and drives up and when you've got these banking crises and a segment that go dead. europe the places like greece portugal

ireland that need to the most investment not to be able to produce the incomes that will help them pay their debts and look after their banks into the other ones that the next best so what we need in europe is something like the new deal. we need and investment led to cover the problem and our suggestion the models proposal is that the european investment banking in the bag you know wonderful institution. of the world bank and all that we need to do is simply go allow it to job i bring about the government you don't we're not doing for political use and what's actually not a much to be sure and let me let me read a quote to you that you said the euro zone feature is a central bank with no government and no national governments with no support of central bank arrayed against a global network of mega banks that they cannot possibly supervise are you advocating a fiscal union here and is that even feasible in the current environment when

there's so much hostility among some of these member states especially between germany and the periphery. in short not ok and it's clean but this is not part of the modest proposal and what makes it more this is that we're not arguing that your union over what we're saying is that we can deal with these problems without moving in effect of their actions so that you know you'll be inside the bag if you recall the point i made earlier. would not be financing them. i think you wouldn't have germany financing or buying the debt the reason what you would have is the european central bank. utilizing. good name international markets to borrow effectively on behalf of member states but then have them repay those loans to people like you know parents good parents high credit worthiness. securing them all doesn't have a youngster who was in spain is low and therefore the interstate to pay for their

mortgages. and then have the youngsters to repay the loans it's the only way we can salvage the years on without that. well at the end of the day are we just increasing debt or we're shifting the burden of debt of borrowing from one entity to another maybe you can explain for our viewers how this is your modest proposal is a little bit different than what's going on currently in the in the eurozone. what we're doing now to increasing debt massively because in its wisdom the european union has decided to be consultants insolvencies of banks and insolvencies of states by lending money to the insolvent states and you know that this is to say them policy. because the condition for lending that needs to do something comes from which the old and the new debts will have to be debate so. adding debt on debts in an unsustainable fashion is precisely what's happening today and what

we're suggesting in a modest proposal is that we do the opposite that we'd find a smarter way of reducing the top of that burden of the eurozone over the next twenty years by having the bank. play this role that's mediated between member states. and money markets for the purposes of actually shrinking the amount of interest that would be able by the member states of the unit and also if you take into account the other policies that work with you or with the investment led the recovery program all that the purpose of that is to shift i don't savings and we have massive i've been saving saving a lot of that amount of money in year. too scared to be invested in with that. by having to your opinion vest and banks that mountain of i've been saving see the

best ones you journey in which the debt will be used and i would add that a lot of those savings are actually at the federal reserve we learned these foreign branches of these banks in europe have over a trillion dollars just laying fellow at the federal reserve but i want to get to some of these alphabet soup names are a lot of people in the u.s. are going to be familiar with some of these programs we have the e.c.b. . b. . how do these fit into your particular program and which is the most important. not only important. these are the institutions will have and will have to use them we have to do grow them ration and the problem so far is that we have used the institution that we have. rather than simply mapping. and we've created units to use. which was founded on sound and therefore they're incapable of being strong enough to withstand that we're giving them so there are

a whole lot of other modest proposals how to deploy that means that we have in a manner that allows them to get a job and that is to defeat those three four crises that we face and. it's overcomplicate in europe we have a central bank like the federal reserve. we have. and they do the european investment bank which can be thought of as if you want. a potentially a new deal agency or expecting public investments it's been doing it for twenty five thirty years very successfully you know you talk about the infrastructure of the new deal like the tennessee valley authority i mean are you talking about this is what europe needs to be doing in order to invest in itself. so that if you look at the map of europe for instance you find the eastern part. which is part of the

unit green. has infrastructure but they still the nineteen fifties and sixties. no fast lane are connecting let's say greece austria and germany and if such a train were to be built lots of us train guess who would benefit the most. it will be germany because it's interesting because doing it and that kind of investment be mutually advantageous for the whole of europe all we need to do is simply allow that you're going investment bank to go ahead and make that investment you have been investing in the bank can make the best and wants to make the best me but we still have you know we have a silly rule in europe where every investment has to be called financed by the national government we only have about thirty seconds left but who's era do you have with this modest proposal are you making any tread treadway whatsoever right now. is

a very interesting story on the one hand behind closed doors there is a great you know interest you know modest proposal but when the cameras are on and the microcosm switched on and in a press conference. it's dead silence because. that was my interview with you on is about a fight this professor at the university of athens and author of the global minatory now you can read his modest proposal on his website but if i could you coming up area and breaks down insider trading and not just the hedge fund there is more of that to it than you might think some even argue it should not be a crime at all after all those in congress seem to get away with it legally and with impunity then i do all sam sites about the very same subject as well as of will do all of the year big beer versus the big banks so like them if you got them and stay to.

the worst year for the little thing only one out of a. radio guy. minestrone. what you call a budget because you've never seen anything like this until. i would grab it as questions for people in positions of power instead of speak on

their behalf and that's why you can find marco larry king now right here on r.g.p. question more. as a seed capital advisors has been one of the most successful hedge funds on wall street accounting for anywhere between five and ten percent of the trading volume on the new york stock exchange and exchange for consistently high returns as they see charges their customers some of the highest fees in the industry however the firm has been under intense scrutiny over insider trading allegations and april as they say capital settled with the security and exchange commission and paid

a six hundred million dollars civil penalty but apparently that was not enough to satisfy the department of justice. today a federal prosecutors filed criminal charges against the firm alleging they were involved in a decade long insider trading scheme giving hundreds of millions of dollars of trust on its profits these charges could put billions of dollars at risk to be forfeit to the government the feds also want to band in individual residing inside greenwich connecticut as they see owner for managing client money for the rest of his life. then the visual they are alluding to is stephen cohen insider trading is a very serious crime with civil and criminal penalties as thomas a choreo quoted in the wall street journal the message that's coming allowed in clear from the government is they're not going to tolerate insider trading on wall street to better understand what exactly as they see capital advisors did wrong

let's break down the serious crime by definition insider trading is the buying or selling of security by someone who has access to material nonpublic information about the security essentially it's buying or selling stocks of a public company based on information that the public does not have access to the rules defining who is considered an insider are complex they could stretch as far as any person related to the company including broker employees and family members but in general and a vigil insider would be any individual who gains from nonpublic information knowingly and then trades on that knowledge of the justification for in insider trading being illegal is because if you have inside information it would be fair it's other investors who don't have access to that so i'm also believe it raises the cost of capital and decreases overall economic growth as they see capital advisors is alleged to have hired numerous portfolio managers and research analysts

who are engaged in a pattern of obtaining and tighter inside information from dozens of publicly traded companies and at times the recommended trades to the as they see owner based on inside information specifically what as they see did it was they hired individuals who had close ties to the industries they were involved in these close ties could include someone who worked in the industry beforehand or simply someone who has colleagues and friends that work in the industry they traded in other words employees were being paid for the relationships they had made throughout their careers but some argue with this should not be a crime because there are no victims involved here. making economic sense murray rothbard rowe a major difference between the crime of insider trading and other crimes is that insider trading is a crime with no victims very simply it's using sapir knowledge to make profits this is after all is what entrepreneurship and the free enterprise system is all about

he claims there are no victims here because both parties the seller and the buyer profit even went to third party is involved you want to trade based on walk capital resources are better to be in the hands of the knowledgeable and then the lucky he goes on to make the case that in all other sectors ignoring businessmen would go out of business but only in the financial markets do we want the ignorant to have access to limited resources by a good luck limited capital resources should be rewarded to the most efficient and who understands the markets best no one cried criminal when the top securities regulator cashed in of the top securities a lobbying firm but when wall street hires someone for their connections and relationships we call their private illegitimate the revolving door is present in all sectors of government included but it seems as the latter who excuse the tension and punishment and that's the breakdown of insider trading now let's get to today's a legal. joining

me is political commentator sam sax you little bit of trouble there i'm feeling comfortable in here a few times to sort of your jacket off my parents lose some ties to the very first story big banks meet big beer large beer companies including miller coors are putting pressure on the federal reserve to crack down on wall street miller coors a major aluminum buyer and that's the fed to toughen. oversight of banks like goldman sachs and j.p. morgan both banks are accused of manipulating aluminum prices by controlling large metal warehouses part of the london metal exchange network your thoughts so basically we have banks running a racket that's screwing over companies like these big companies that other companies that use aluminum the bigger picture here is this wall street the wall

street economy the fire economy finance insurance realestate used to be about ten percent of our economy now it's about twenty five to thirty percent of our economy is starting to dominate our economy and it's doing that because it's preying on all the other industries in our economy through these rockets through price manipulation through all this stuff do we want an economy that functions based on manipulated fake money or do we want a condom either functions on actually building stuff and actually selling and buying stuff now do you want by that kind of on your side here but i'm just going to play devil's advocate it only adds a tenth of a penny to each aluminum can so it's not really coming through the case rumors anyway due to like three billion dollars that it tend to the penny adds up it's like the office space scheme where they're just doing fractions of better than superman what it is a lot of productions that stuff adds up for superman ok it is because wall street has been deregulated for decades now which is giving it the tools to be able to engage in this sort of manipulation in this predation on other sectors of the ok

i'm going to add to your argument here goldman sachs and i was talking about this on news the other day goldman sachs has been in the commodities industry for decades they became a bank holding company in two thousand and. fed money so yes they were already big and commodities and now they're even bigger because they have and we don't have these walls that separate them from the gambling side from the depositors side j.p. morgan got into this in a big way they were involved in crude oil when crude went from one hundred forty five dollars down to thirty dollars they just bought cargo ships or rented and put them out to sea and waited for the price to rise and so there is a an entire vertical industry now in the commodities market that's based on free money from the fed so that is i agree the free money from the fed is making it worse for the banks and just a fact that the banks are even allowed to compete in these commodities markets is a big problem all right so we're in a little bit of agreement here and maybe allowed sort of we're just going to move on to the next subject as we talked about earlier stephen cohen and capital are back in the lot of the light the hedge fund was charged with wire fraud and

securities fraud according to the new york times the charges were filed under the theory of corporate criminal liability now this allows the government to attribute employee criminal acts to a company itself and that makes sense because corporations are people right. mitt romney certainly they just there i guess this is part of a sweep that they did that is we doing here are going on inside the f.c.c. doing that whole government not cracking down on on insider trading and that's so convenient let's go after the banker criminals who are basically committing acts against other banks because the objects who are trying to get the upper hand on other bankers but let's not go after the bankers who are trying to get the upper hand on consumers and on main street right. here is a problem is it's very easy to detect insider trading it's kind of hard to go after for the d.o.j. to go after and prove fraud in intent but the securities and exchange commission has had these algorithms in place in

a monitoring system to monitor suspicious activity before very very civilians and so it is it's all about headline grabbing and say we're doing something but they're not going after the right to go after the people who are kicking the. millions of americans out of their homes on the legal documents the robo signing years let's not not not one but the little rogue reciters i'm talking about the main slightly authorized that stuff going up let's go after those people and then we can also go after the entire trade was there and there's also the other problem of the revolving door i think one of the reasons that we're not going to as you see is not going after these big banks is i mean the current head of the f.c.c. is mary jo white she came from a white shoe law firm and was representing these guys and she revolved through those doors three separate times so the people at the chart at the head of these agencies are very conflicted they don't want to go after their for all of these had their agencies are from these industries and a whole other component are these intelligence firms that were going to between congress and these financial markets they're feeding whatever laws might be coming down the pike and congress giving that information to the banks so that they can

profit off and ahead of time there is movement in congress to do something about that and then you know what have they got thrown out there cantor thank you all right and spencer baucus the chair of the house banking committee finance committee ok we're going to move on to a final subject we've got about ninety second senator warren's proposal mccain's proposal to reinstate a form of glass steagall has attracted a lot of attention critics say the separation of commercial banking from investment banking wouldn't prevent another crisis will it i'm just going to repeat what elizabeth warren said only that this is because she's starving because i don't think there's any counterargument to this fact that from the founding of this country every ten fifteen years we've had a major banking panic and then after glass steagall in one nine hundred thirty two after the whole everything fell apart we went sixty seventy years without another major banking panic coincidence well i think it gets down to moral hazard when you have the federal reserve with a wink and

a nod always willing to build somebody out and giving away free money that's the source of the problem now i do think that in the current system that we have we should have a wall but the thing is the dollar as it's proposed is not really going to. give us any better solution because it's just going to shift one side to another it's not going to put a real wall like that was in place before there's too much money at stake here absolutely i mean when we're talking glass steagall maybe we should be talking about the older one that was put in place that was much stronger it's hard to get something like that in place nowadays for all the reasons we've just talked about over the last few minutes a revolving door of money and politics in the sand we've got to rub here so if you want to weigh into today's show be sure to like us on facebook at facebook dot com slash prime interest you can follow soon here at sam sachs and you can follow me english but thank you so much for your vote on the dual.

and it was an evasive day here at prime interest it seemed as though the essays the owner is in the clear for now even though mr cohen's firm was handed down and went and burning he continues to walk towards the back door of his humble office on constitution avenue even as his favorite toy the s. and p. five hundred has been exposed as a cue manipulated friday and the rich move towards the exit door of cash they're collecting because i was and vented you know very well and then yawn as explained his proposal just as it may be to help your the exit its financial crisis then we explained in just how insider trading works and who may or may not be guilty of any wrongdoing and on that note we're going to sign off thanks for watching come back to miles from everyone at prime interest i'm sorry i'm boring everything.

plus how does the new alert animation scripts scare me a little. there is breaking news tonight and we are continuing to follow the breaking news. alexander's family cry tears of the wife and great things out there that there had to be added brenda arquette a court of law found online there's a story made for movies playing out in real life.

is best known for his role in c s i it is close friendship with the president actor and political activist hill harper is here to talk politics and his new role in covert affairs on the usa network also joining us conservative radio talk show host and apprentice contestant maybe beam plus an inside look at washington's international spy museum all next on politicking with larry king's. film to politicking with larry king and we're happy to welcome actor off their political activist and close friend of president obama hill harper hill and president obama attended harvard law school at the same time.