no there i marinate and this is boom bust here some of the stories are tracking for you today. first up china's jump in u.s. debt so the headlines say what are the chicken littles of the financial world getting ahead of themselves we were below that historical hysteria when it comes to foreigners buying of uncle's sam's ious as well as the real eight hundred pound gorilla sitting on the trade desperate over there and thirty eight months after dodd frank was passed the bureaucrats are still battling around with the final rules rules that are supposed to keep your favorite too big to fail bank on the routes naylor of public citizen joins me to cast

a skeptical plan and finally bob talks with the david webb about how the financial industry gamed the system to legally take your assets legally even if fraud is committed let's get to the ship. with the u.s. government shutdown still fresh but slightly fading in the memory of most the treasury just released its monthly report detailing who is buying and selling u.s. debt since may two thousand and thirteen china has shot at twenty nine billion dollars in treasuries leading to headlines such as this by bloomberg china treasury holding drops to six month low as you'll drive and then this one from the

associated press foreign holdings of u.s. treasury debt dipped to five point fifty nine trillion. dollars straight decline and wall of twenty nine billion dollar drop does seem big it's only two percent of china's total treasury holdings and since two thousand and eleven china has still added one hundred twenty three billion dollars in treasury billion with a b. yet in two thousand and eleven two and a half years ago we saw this headline from c.n.n. money. china's holdings of u.s. government debt inched lower for a fifth straight month and our very very favorite china trims u.s. bond holdings for fifth month as debt approaches ceiling yes yes that was from may two thousand and eleven made to the has an eleven not this month now here to shed some light on what exactly china is and is not doing. so his history certainly does rhyme it certainly does right now can you put these numbers into perspective who

are some of the largest holders of u.s. debt sure we have a graph here i can with a couple of graphs but the first one shows the largest u.s. holders and if we start with the eight hundred pound gorilla at the right that is a better reserve and they're up to two trillion dollars right now and then if you see japan u.s. individuals and china that's mainland china all hold about one point one to one point two trillion dollars and then i've also included banking institutions in the u.s. which are way down to about four hundred eighteen billion dollars and they've shut about twenty percent over the last year in my mind that could be the bigger story than china going on right here but we'll get on to the next graph in a second ok that's interesting to know what about the long term trend with these big holders sure going back to two thousand and eight and this is the subject of our next scrap if we look at what china japan and the federal reserve are doing we can see that they've all pretty much steadily increased and of course the federal reserve is guided by q.e. one two three infinity but we also see that china japan have increased over the

same period and to be fair china peaked in july two thousand and eleven but they have risen steadily since about one year ago so it's a big story here that china is shedding its debt i don't think it's going to do anything stupid which would be to sort of a major portion of it that would be clearly against its own interest a much more concerned about the fed's exit strategy that's something we talk enough about you know but wait a bit now i understand this treasury part it's pretty volatile and it changes the. actually. the revisions are substantial can we trust it is the question well in the current report we're going back to august two thousand and thirteen and from there we have revisions that are coming in to come out and sometimes these revisions are as much as one hundred billion dollars it has to do with the methodology china historically has bought not only through the u.s. primary dealers but also through the united kingdom they have all kinds of offshore accounts so you know it takes a bit of time to be able to put these numbers in the correct historical perspective

now this is something else also china they now enjoy a special privilege when it comes to buying treasury debt and this is from reuters this is kind of incredible china can now bypass wall street when buying u.s. government debt and go straight to the u.s. treasury and what the treasury's first ever direct relationship with a foreign government now the question is why would china need a direct line to the u.s. treasury and does this bring up any security concerns very good questions first of all china unlike japan say they buy most of their u.s. treasury securities through a single chinese entity in japan they have pension funds that the bank of japan and a lot of different people doing the same thing so they don't necessarily need and i'm talking about japan a direct line to the treasury now what china was doing before and i was saying they bought through primary dealers they suspected in the years coming up to two thousand and nine that they were being front run or other words they had orders so big coming in that some of these primary dealers whether it's j.p. morgan goldman sachs they were jumping in ahead of them so they started buying

still fully on the side where the treasury didn't like that once it found out because all the sudden they would realize one day well china has so many more securities than we thought they did so treasury changed the rules but at the same time they gave china the special privilege which is direct access to the treasury department your second question does this raise security concerns yes it does this story got very little play in two thousand and twelve when it came out but the article in reuters was went to great. to point out that the treasury said yes we are concerned about hacking and we have made sure that this line to the treasury is one way and it only is used for purchasing treasury bonds and not for any kind of market manipulation kind of crazy that you know do you think that it was any other country maybe japan maybe. it depends if you look at the largest purchasers of u.s. treasuries again you know japan is kind of they kind of have a fractured borrowing market there you know maybe one of these other centers will come up but the biggest purchaser of course is the federal reserve and by statute

they actually cannot buy directly from the treasury replacing the existing maturity treasuries that are maturing in his profile so something's running out in the right choice today they can buy directly from the treasury otherwise they have to go through these primary dealers that in itself is there's a lot of graft that can go on there because the fed has to buy above market prices from these primary dealers and then when it sells these securities if it ever sells them we don't know. below market prices so there is a built in profit mechanism for the big banks who are oftentimes these primary dealers a select group that's like to trade with the treasury and with the federal reserve thank you and i'm sure that we will be keeping a close eye on this as it seems every six months or so we have a similar. all right well there you have it we'll be tracking this and keeping you posted on all the latest.

joining me now to discuss all things dodd frank is bart naylor financial policy advocate for public citizen and out of a secret advocacy group here in washington serving the people's needs in the capitol thank you for joining me bart thanks for having me now first and foremost. is dodd frank being implemented in the way it was designed and implemented. absolutely not. frank has four hundred rules embedded in it that is to say the regulators the f.t.c. the federal reserve have to take the statute which sometimes is elegantly written in only maybe ten or twelve lives and to change it into the actual rules by which banks have to behave it's basically like saying congress says drive safely drive more slowly and then the cops in arlington say all right that means fifty five miles an hour on the highway and so forth well by some of the rules are very

important congress said they need to be implemented quickly nine fifty six says don't pay bankers with structures such that they take excessive risk that was supposed to be done in may of two thousand and eleven it's now october of two thousand and thirteen no rules there are roughly a half more than two hundred rules that are follow in violation of the statutory deadline now when to think was the full and final implementation of dodd frank well . in a long time i don't know some of the rules are hoist by the fact that they are multi agency the volcker rule for example twenty two separate people voting on it seven fed governors five commissioners of the f.c.c. five commissioners of the c.f.d. see it is unclear when it will be now eugene scalia son of supreme court justice antonin scalia he is known for being a quote absolute bulldog on frank and wall street secret weapon question is how

much power does he really have he has a lobbyist and he's a powerful one an. attorney as well but how much power does he really have and how much damage has he done enormous damage in bringing cases based on any little nit he can find his biggest success is to point out deficiencies in what's called cost benefit analysis now agencies don't really have to do a cost benefit analysis but they do and he ran into a judge a guy named ginsburg who famously failed to make this. court because he was partaking of some controlled substances but he he wrote an opinion it's called business roundtable for short which said that the cost benefit analysis of an f.c.c. rule we can go into some detail was deficient and threw it out that not only freaked out the security and exchange commission which stifled all rulemaking you can you can watch the curve of progress and it just hit a wall after that decision it frightened all of the other agencies that they would do all this work and their work would be ground to a halt because intersected with

a republican appointed judge and stop the rule altogether so as an advocate for wall street and say that he's one of the better ones he is one of the better ones yes indeed. he even brags on his website gibson dunn crutcher you can link to an article written about him which says if you want your rule stopped there is one stop shopping with eugene scalia. phrasing but that's the point created quite a bit of self promotion there as well now can you speak to us about the quote holes in the volcker rule it's our understanding that the big banks are still allowed to engage right here in trading they are by. by the fact that the fed and the other regulators have not done anything can be in violation that is to say they can do proprietary trading that's pissed a pale unit and we invent euphemism that's called ripping off your customer that is that's what prop trading is it is buying low and selling high to people who don't

know any better and they are your counterparts banks are not allowed to do that but they are doing it as we speak now you're outnumbered a lobbyist when it comes to dodd frank and the big banks they have many more lobbyists on their side the banks they they didn't know in the sense that dodd frank is a law yes it's a long time it's been a slow and painful but you do see this as progress at all from your perspective well martin luther king made famous the phrase that the. history bends towards progress so i need to believe that we are making progress you know i can't get out of bed hopeless every day yes we're out numbered one hundred fifty to one in terms of lobbying yes well street spends roughly two point five million dollars per day lobbying yes they have bought congress yes doj frank isn't so much wall street reform but the restatement of existing law that wall street let us have but no i think america has not forgotten that wall street done them in wall street. polls

pretty much near congress and in the opprobrium in the in the low esteem held by americans so i think to the extent that one thing we as public citizens have is the right to vote ideally that will be remembered come november when you get to send the right person to congress we've said people like elizabeth warren way to go ideally we will send other like minded people are thank you for joining me please come back we have many more questions about ask you about offshore and how that works with some of these banks to over and over time as well as for have running out of time now that was financial policy advocate part naylor coming up how did the financial industry change the rules to make bankruptcy a game of musical chairs david weber has the answers then forget but ball field size yachts that you billionaire trend for high performance submarines is all the new rage plus we couldn't help the pope a gaping hole in alan greenspan's memory of this five days coming up. the suspect. everybody told you if you did you know the price is the only

industry specifically mention in the constitution and. that's because a free and open press is critical to our democracy but there's. in fact the single biggest threat facing our nation today is the corporate takeover of our government and i was proud to make that we've been hijacked handful of transnational corporations that will profit by destroyed. what our founding fathers . meant on this show we reveal the big picture of what's actually going on the world we go beyond identifying. rational debate real discussion protocol issues. are you ready to join the movement while they are.

trying to go. to. the bank. and the. right. place. just two. days. often times in history the most epic of changes stem from something seemingly insignificant such as the assassination of an austrian archduke now in the realm of the finances the entire concept of ownership with respect to financial assets has slowly shifted over the last four decades now these changes culminated with bankruptcy reform that was enacted just before the financial crisis how convenient

according to david webb founder of origin investments the sad fact is this any security as you bought and paid for and hold in a brokerage account are no longer your private property at least not the way you think about it so i first asked david about how we got to this. there's no coincidence really that these changes have come about with the growth of the derivatives complex so that these client these pools of client securities could be set up structurally so that the account providers could borrow client assets out of this undifferentiated pool and pledge those as collateral to under underpin the derivatives complex and so we have what's happening from a macro standpoint is of course massive amounts of liquidity are being added to the system to deal with an underlying situation that is really

a global depression now and that liquidity is causing an explosion in paper assets that have now reached a scale that there can't possibly be enough collateral backing so derivative instruments for example are over seven hundred trillion dollars ten times the size of global g.d.p. . many years ago the the derivatives industry would would suggest that people were. their concerns were unjustified because derivatives would net down to zero in theory in theory and what happened to the practice and what's what we what we've seen is that the industry actually did not really believe what they were saying because they've been working since the one nine hundred ninety s.

to assure that they will have collateral backing for the use derivative contracts and that preference will go to the secured creditors. surprisingly not even the introduction of fraud means that customer assets will be returned as long as that fraud wasn't conducted with intent by the final holder of those assets so just think m.f. global i next asked david how this could be. the way the law works if there is fraud on the part of the account provider that absolutely does not interfere with the secured creditors ability to take those assets just to you it is the perspective that we can have fraud at one level but at a different hierarchical level if there is no fraud the collateral or securities posted by the customer can still be taken well let's say the way it's set up it's virtually impossible to show fraud. that that's really the purpose they're.

in it is clear there's there's a document in which the federal reserve responds to a questionnaire from the e.u. legal certainty group this was received early in two thousand and six and the legal certainty group was working along the lines of conforming e.u. law to the american model in other words to assure legal certainty for secured creditors so they were really looking to the fed to say how should we do this so it's a it's a very illuminating response. in which. the fed makes it clear there is. that if there is fraud on the a part of the account provider that will will not limit the the secured

creditors ability to to keep the assets. but also that. if if fraud could be proven on the part of the secured creditors sensually collusion in the us that is the only exception but in each. insolvency. we have seen through the crisis that has not been possible to show in the case of m.f. global for example j.p. morgan was. centrally the prime broker and the cust odeon had a number of hats on their head the cust odeon up for client assets they knew all about it and they. they were a little worried about that. about it and would that be a problem in terms of being able to demonstrate fraud so in the final days before

the insolvency they pressure pressed. the management of m.f. global to give them a written assurance that these were not client assets when they knew full well they were a client. was laurie ferber formerly of goldman sachs who was the general counsel of m.f. global and ms ferber stall j.p. morgan throughout the weekend so one would think mr dimon and co should have known full well whose assets those were in other words customers anyway it's time for today's big deal.

thing. a. thing. who doesn't love movie memorabilia on must the brains and brawn to be on there we go some lights the brains run flicker in real theater brains and brawn behind tesla and space x. he sure does in fact he likes movie memorabilia so much that he shelled out one million dollars for the lotus a submarine car from the one nine hundred seventy s. era james bond film the spy who loved me which you just saw any plans to turn the prop into a working submarine car now as you just saw again in the clip the original james vaughn not sean connery fact it was roger moore and he drives the car off the pier

to have a the talking helicopters the wheels retract fins emerge and with a touch of another button a rocket launches blasting those choppers that were chasing him right out of the sky but now must was apparently disappointed to learn that the prop didn't actually do this and he won most told n.b.c. news. quote i was it was amazing as a little kid in south africa to watch james bond in the spy who loved me drive his lotus off a pier press a button and have a transform into a submarine underwater i was disappointed to learn it can actually transform what i'm going to do is upgrade it with a tesla a lecture power train and try to make it transform for real who now bob with an estimated fortune of six point seven billion and the engineering minds behind tesla do you think that you know mr musk is more well placed to make his childhood fantasy come to fruition than most money helps doesn't it also to have an active imagination i think some of the most exciting developments in terms of exploration

be it ocean oceanic or even in space are done by people with entrepreneurial ambitions of richard branson you know he's hasn't climbed into space commercially just yet but i keep crossing my fingers that he'll get there yet he has his own company he doesn't have his own company is he taking flights that are they going back to the caribbean and his little habitat there i don't know yet but i hear their inner space they have it out. so anyway all these things are on the horizon so i think we need to draw a line we criticize the financial billionaires sometimes their gains are ill gotten but these tech billionaires you know if somebody wants to go out there seven eighty seven or build an underwater submarine go for who are we to judge and who are we to touch speaking of submarines it seems like it's kind of taking the place you know for the luxury yacht that it's now the luxury submarine and they can go to incredible places check out this picture of these things are comparable and you know these are time yachting it's a thing of the past for the super rich no well it could be i think it's pretty

exciting we actually know little i would say less about the great depths of the ocean then we do about certain places in outer space even our own solar system so if these billionaires want to go down there and explore again my rock did you have a good time down there now do you think the industry is going to be similar to the business. model out of the yachting industry where it's just a couple of big players and not much room for growth i mean technology and engineering they can always get bigger right the vessel getting bigger and bigger we'll just have a giant submarine that stretches from the coast of miami florida a key west all the way to cuba i don't know it's up to them it's a free market in terms of what they want to build and what they can buy now surprisingly enough this brings up another issue of smuggling and immigration get this this is incredible recently a high school educated drug smuggler built a lead of some marines in the middle of the jungle to ferry cocaine from the united states to colombia now here's the question who will oversee or regulate this new aquatic world does this fall under maritime law whose jurisdiction is this know who

you know once you get within a certain mile a number of miles within somebodies coast the local authorities whether it's your state or whomever have jurisdiction over this know that this has been going on for a long time the various drug cartels have been building submarines and they've been competing against each other so there is an underground competition that we haven't quite seen play out among the billionaires but the actual black market which is pretty interesting so how does their black market will no longer be black in the sense that they can sell their their little. plot of machinery to billionaires now they're saying let's make an entire industry vertical now switching gears a little bit in a lotus that's. federal reserve chairman alan greenspan is making the rounds with his latest book the map and the territory and this is provided an opportunity for some to challenge his record as that chairman in a recent interview greenspan claimed total surprise at how big subprime had gotten by two thousand and five he said he was told very little of the problem and that

the fed didn't see anything quote big now we did some digging into the fed's own archives and added june two thousand and five fed meaning one of greenspan's own fed governors told him this when you look at the mix of products more of the mortgages are sub prime products so. what i am concerned about from a liquidity perspective is the lack of discipline relative to previous periods bob does this surprise you that is remains found a lot or it doesn't surprise me at all i will say that greenspan once denied the existence of these very transcripts that we are now reading they did not become public and their only public on a five year bowling basis or so they only became public after the financial crisis and after there was significant heat on the fed so greenspan has a go on his face and he might just be too old to even realize. who valves are but i like it i like it ok that's all for now but you can see all segments featured in today's show on you tube but youtube dot com slash boom bust r.t. we also love hearing from you so please check out our facebook page at facebook dot

com slash from all of us here boom bust thanks for watching see you tomorrow same time some. serious last chance is the day for the geneva conference are being arranged the assad regime may sit across from an empty chair syria's rebel opposition is on the ground or hopelessly divided the syrian political opposition in exile is divorced from the brutality on the battlefield so what can geneva two point zero zero to achieve. i'm. trying to. say. and i'm. right.

here just to. that's. a. very hard. to get. a long letter back with that you're right there are. plenty. of them.

coming up on our team friend or foe what president obama meets with the prime minister of pompous don in washington will the meeting focus on drone attacks and trying to ease rising tensions between the nations details ahead in the sun i get most of the detention facility in cuba is a shielded away from the public and the media but our team has gained access to get for a rare inside look at the story coming up and oh canada our neighbors to the north now find themselves involved in a spying scandal it appears a canadian intel agency is accused of collecting meditate on its own citizens which is a violation of law more details coming up in today's show.