out in real life. hello there i marinate and this is boom bust here are some of the stories we're tracking for you today. crowdfunding is coming to wall street will a new s.e.c. rule democratize the capital markets or is just six pack about to muppet ties a new brand of sell side marionette will be multiplied by them we dig into the five hundred page rule and speak with copper in austin fitts to flush out the pros and the cons of an occupy wall street activists alexis goldstein talks with more about a new bill in the house which overturns a key section of dodd frank you won't want to miss it and you might not be a fan of it but citigroup they sure are and they should be seen as how their lobbyists are easy two percent of it to finally mr zuckerberg sorry but twitter now

tops facebook as teens and most important social media tool we'll see how this price is into the impending twitter i.p.o. let's get to this show. is it a license to steal or wall street meets main street fifteen months after the jobs act was passed wednesday the f.c.c. finally proposed a rule to make equity crowdfunding available to so-called unsophisticated investors not surprisingly controversy about filmmaker spike lee appeared on bloomberg and didn't seem to appreciate his hosts connotation that he has enough money not to.

check this out. that's what many are saying to spike lee they call on the famed director to end his new kickstarter campaign that you don't now kickstarter the web that helped. her get out there. that is why we. should grin and we will make it people a story about her so you know you hate it like get it done i am here. for trish but opponents of the job act and its new crowdfunding rules simply say it's ripe for fraud and abuse here's what self professed white collar criminal sam antara told us. all even get me started on that ok we are going to but i would love the jobs act i love the jobs act to go back into crime or it will definitely get into the next. joining me now is bob how you doing today why did you have to like this. crowdfunding it's nothing new you know it's been around forever of liberty statue

of liberty and crowdfunding there you go from the french. you know you small ventures could legally raise money via loans or gifts for a long time now but only equity or stock within an actual company and within an actual company that is legally a new thing to do and it was off limits for a long time why is that what does it mean to own equity or stock in a company your participation in their profits in the future their potential profits and that's something that we haven't seen so far because that fund falls under the aegis of the federal and state securities laws the securities industry is heavily heavily regulated despite certainly pools that might be exempted for the big players that from time to time but we won't touch that right now basically if you want to raise money in the capital markets you have to become a public company and that involves a lot of work a lot of money or you can fall under an exemption but typically those exact exemptions were reserved for so-called sophisticated accredited investors so you have to have a million dollars net worth. or make three hundred thousand dollars

a year with the jobs crowdfunding exemption does is it lowers that hurdle so that smaller companies can raise money from smaller investors and they don't have the same disclosure requirements that you would have if they're trying to raise a bit more money now it's my understanding that unsophisticated investors the people with i believe it's under one hundred thousand dollars they can there's still rules and regulations and players are going to only only invest something like i think it's five thousand dollars to see basically wants to keep it to about ten percent of somebodies net worth or below so there is a there and also i would add that these companies have to have financial statements now they could be very simple but they're only trying to raise one hundred thousand dollars once they hit the five hundred thousand dollars threshold they have to have fully audited financial statements and that presents a problem for a lot of the companies because especially the smaller ones don't keep the best books and records particular one are getting off the ground now what types of ventures is crowdfunding really kind of being used for and attracting if you will and how might this change with the f.c.c.

is ruling what we have a graph here this shows that a lot of the players in this market are actually in things such as social causes that's number one in twenty seven percent we have films and music going down the page even fashion what we see second to the top is business in entrepreneurship at seventeen percent and this is typically the space that we would expect to see when somebody is trying to sell investment shares in their company and so with this jobs amendment that's coming through we're going to see a lot of new kinds of players enter the what we would consider the stock market now recently students have taken to crowdfunding the cost of their education which is pretty interesting which is pretty interesting and i don't know how i feel about that yet still out but it's kind of like those n.f.l. players that are exactly like maybe the student we can participate in the students future job earning if they can get a job you know i wasn't allowed to crowd fund for my education and not this isn't you know our exact words brave syria but it's. really is it's an interesting thing

that can happen after the opposite end of it though is that you have wealthy people also crowdfunding spec we don't come after us for people like spike lee don't know how much we don't how much we don't know much but one of these trends tell us about the end of all individuals actually looking to crowdfunding it's just preface this by saying it's not uncommon for very wealthy people not to use their own money typically they will have some skin in the game but they don't want to tie up all their resources and just one or two projects so yes it's very common for them to access the capital markets what this is doing is a little bit different because yes they're targeting smaller investors so-called unsophisticated investors but guess what these people are targeted every day anyway anybody who has a stamp collection numismatic coin collection they're probably on the mailing lists and the phone call is in the email list of a bunch of people who are you know legitimate or illegitimate people are getting solicited every day so this is just another form of the maybe individual should be suspect of anyone who isn't willing to put their own money into their own. iran

must always put his own eyes on deb i know when you're going to have now the burning question is will this be a tool for fraud of course it is and any time you have you open up the capital markets with the new exemptions you're going to see more fraud but this is and it's going to take years for this to shake out in the courts and people also have to consider who are getting into this business it's not just the feds who have these rules coming out the state regulators are also going to get into the fray as well oh there you have it but bob you actually recently had a chance to sit down with castro catherine austin fitts to talk about this very subject now yes we did yes i did actually she pointed out to me and we've mentioned this before that even the statue of liberty was crowd funded so this type of funding has been around for a while and she also had some interesting comments about the decentralized nature of crowdfunding we even ended up talking about three d. printing but i first asked her how this investment paradigm has become a type of communication tool for project and business owners and here's what she said. look at people who've used crowd funding to finance their or their

enterprises just through the gifting you know they've been able to build incredible audiences and sort of a dynamic communication with their audience and it works for them if they're outgoing at the same time not everybody's ready to hear thousands of people giving them feedback daily about everything so it's in his decentralized it's very decentralized it's very democratic i mean i i lived in a world once upon a time where you know i only talked about to about twenty people about money and then sort of only on the trading floor in the jockey club or the twenty one club you know it's very. now i live in a world where everything is wildly open you know you get on late night t.v. and suddenly you've got four million people sending you e-mails and saying oh you made a mistake this is the stupidest thing in the world and you know it's a very dynamic rich feedback. it's a very open model and i have to say going from one to the other is shocking so it's

going to be a very interesting i think wall street doesn't necessarily take this seriously very slow to adapt sometimes especially in the legacy of big houses there well you know they're really in a different business they're funneling capital that you know can go very centralized in a very large amount so it makes sense to do what they do but it's going to be very interesting to see this roll out sort of the micro on the internet platform and how it grows because you're you're really talking about. here you're talking about creating a very fundamentally different communication between your financial eco system and an enterprise and i for one think it can be very healthy despite my concern about the fraud are there any other technologies that are just kind of sitting on the show for waiting for regulatory endorsement or just kind of on the verge of a gateway and if not are there any future technologies that can aid crowdsourcing in a way that we haven't seen yet. well i wouldn't say there are any that i know of there's

no financial technologies but i think what you're seeing is a real shift in. in digital and other kinds of technologies so that's going to be happening on the asset side of the balance sheet and then crowdfunding makes it possible for that innovation and the application of those technologies to shift much faster so if you take the changes in fabrication technology if you change take the changes in composite materials if you talk about how they could get applied into you know literally every community in the infrastructure if entrepreneurs have access to this kind of financing and to a much higher sort of learning metabolism relationship with their market i think a lot of this innovation can go much faster and get integrated so to me the big innovation coming is on the asset side of the balance sheet three d. printing maybe the printing is one of the one of the fabrication technologies the

thing that's amazing about the fabrication technologies is they really make it much faster for things from to go from bits to atoms to bits you know it's just remarkable the speed at which you can make something or prototype something but the power of it is when you combine it with the new composite materials. and when you combine it with things like robotics and laborers and. it's amazing because we've seen enormous centralization of manufacturing this gives us the ability to really decentralized manufacturing to do that you need to decentralize the capital so we're talking about decentralizing both sides of the balance sheet and that's where the potential is is it possible to predict the future in terms of five or ten years where we might see this new technology on both the asset or liability side or is it just a kaleidoscope where you just turn it a little bit and you have an entirely different picture and we just kind of leave it up to the the people to decide. we're going no here's what i think i think this

is going to be an unbelievably organic messy process and you know the poet says talks about life's longing for itself and stuff is going to pop out you're really going to see sort of group intelligence go to work and stuff is going to pop out that will surprise all of us you know i think it's impossible to predict what i'm hoping is that it can really revitalize the economy. love it or hate it the technology is revolutionizing the manufacturing space and dragging the investment space along with it. thank you bob now coming up. alexis goldstein breaks down the latest big bank push to repeal part of dodd frank because it's your money they want to gamble with so course that wants to be repealed and don't tell sir richard branson but virgin galactic has some

competition from space yes i said that space balloons stated. big bucks but. we're going to do is go to juneau the price is the only industry specifically mentioned in the constitution and they're trying 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 oppressive a girl that we've been a hydrogen right hand full of trans national corporations that will profit by destroying what our founding fathers one still just my job market and on this show we reveal the big picture of what's actually going on in the world if we go beyond identifying the problem to try rational debate and a real discussion critical issues facing america if i ever feel ready to join the movement and walk a little bit but. i

am the president and this is a society that case i think corporation kind of continue to consume consume consume and the bankers try to keep all that all about money and i'm fashionably late for a politician writing the laws and regulations. on the head. there is just too much rat is today's. topic that. last maybe new york times reported about a bill called a jar ninety two that sunni group happened to write seventy eighty five lines up. sounds peachy. peachy for whom is the question and here to answer alexis goldstein

herself communications director at the other ninety eight percent and former v.p. of merrill lynch and torture bank alexis thank you for being here thanks for having me know right off the bat can you quickly tell us in layman's terms what is h.r. nine thousand so this is a bill that's meant to gut a provision in dodd frank that was called the swaps pushout so that part of dodd frank was meant to push out the riskiest derivatives out of the part of the bank that enjoys f.d.i.c insurance the idea being we shouldn't have these risky instruments kind of pooled together with checking account or some business in savings account or something like that h.r. nine to basically says well actually you can have all of the derivatives that you want in that part of the bank except for one very narrow category called a structured swap and in fact you can only have this narrow category of structure if another regulatory agency says it's on a product that we think is risky so there's a very very narrow slice all the rest of the derivatives can be held in the part of

the bank with the f.d.a. i see insurance now pushing the swaps and derivatives operations outside of the banks if you were to insure depositories and into these capitalized subsidiaries what would that do you know how would this help the banks and the consumers well it helps the banks because there's two different credit ratings on those two different parts of the bank credit ratings agencies tend to give a higher credit rating to the part of the bank with f.t.c. insurance because they see it as kind of an implicit government guarantee if anything happens to that part of the bank their thought is they'll get bailed out and so they give them a higher credit rating separately capitalized entity usually has a lower credit rating and so it's cheaper for the bank to do business in the part of the bank with a higher credit rating just like it's cheaper for me if i have a higher credit rating if i want to borrow money but it hurts consumers because we're essentially backstopping their risky behavior and they're risky derivatives with you know with government money and with potential tack. spare money because if something were to really happen part of the bankruptcy code actually says that

derivatives are paid out first so if one of these banks went into bankruptcy the people on the other side of those derivatives get paid out first before everybody else and so this actually creates a very real risk if something were to go wrong ok now what would architecturally a couple of subsidiary actually look like it's basically just another part of the bank it's they have tons and tons of affiliates in different legal entities it gets quite complicated but it's basically just another division of the company that actually has its own money and isn't relying on customer funds in the question of the customer funds to do its own business so it requires them probably to sell off some of their divisions in order to raise the money to have a separately capitalized and to t. but it's just two different legal entities within the same bank and like you said a couple was and to how much capital would have to be behind this and to do subsidiary of the bank i don't know the actual number but they basically just need to not be holding it inside the part with you have to count that's the key point is

ok now let's say h r nine and it doesn't actually come to fruition you know what sections i believe it's seven sixteen s is what stays in place this is capitalized subsidiary by design would be made up entirely of swaps and derivatives operations . but you need to have a baseline position in order to have a swap or derivative is my understanding so what would be the baseline position if it's no longer within the bank's insurer. well you don't. you have a derivative you have there are two people in the to rivet maybe j.p. morgan has a derivative with weeks or something like that the reason that they want to bring all of them together into the f.d.i.c account is because it's cheaper for them but also because of something called netting and so what netting is is i might have a swap with j.p. morgan where i'm betting that things will go down but you might have a second swap where you're betting that things will go up and netting is about adding those two things together so they want to be able to hold everything inside

the f.d.i.c account because they want to be able to net it all together and see what their total risk is but there's nothing preventing them from pushing all of their swaps out of the f.d.i.c account and into this separate entity but they don't want to do that because it's more expensive for them and what are the costs associated making it so much more expensive because there are operations that aren't banks that do just this correct well sure i guess it's just they have to borrow money every day just like you know to fund their operations to pay their employees because they don't just have a giant stack of cash that ing around they like to play with it and so the higher cost is they have to borrow money from this separately capitalized account which has a lower credit rating because they have a lower credit rating when they borrow money they have to pay a little bit more than they would if they were borrowing money out of this. part of the speaking if you can you expand on that a little because it's my understanding that two hundred fifty thousand about corporate or individual how does this really factor into you mentioned it before you expand on that so the f.d.i.c fund is actually paid by the big six but what

happens in the event of the sort of bank going under is they have this thing called the dip the disk the deposit insurance fund and that's what's used to pay out to people in the event of the bank going under but there's all of this complexity because derivatives are senior during bankruptcy and so what happens if we have an extended protracted bankruptcy fight there's not enough money in that deposit insurance fund to both pay out the derivatives counterparty and grandma's checking account and the business savings account it's unclear. what would happen and it seems to me that the government would need to step in that's right back in two thousand and eight and so it seems silly to me to try and risk that kind of situation instead of making this clear bright line and avoiding the problem in the first place alexis thank you so much for your insight and for breaking this down for us in a way that's so easy to just really appreciate great have you back soon and thank you for having me that was alexis goldstein contributor to the nation and communications director at the other ninety eight percent. time now for today's big

deal. heaven via a balloon it's more real today than you could possibly imagine now a new space tourism venture aims to send paying customers up up and away and you can now visit the edge of space for the low cost of seventy five thousand dollars a ticket i am not joking that is how much it's going to cost you to visit the edge of space now an arizona startup called world view has unveiled plans for a balloon ride to the stratosphere offering passengers about two hours of space like views from one thousand miles above earth and while that's not quite space that starts at sixty two miles above earth the plan requires approval from the

federal aviation administration now the company will begin demonstration test flights this year and they anticipate having the commercial flight operations up and running by twenty sixteen but you are round trip flight would go up about a thousand feet a minute and after hitting an altitude of one thousand miles the balloon would then it come back down to earth which would take approximately forty minutes give or take and the capsule interior will be room enough for eight passengers to walk around and even get a drink onboard as an onboard bar now i turn to bob bob would you pay seventy five thousand dollars for a two hour balloon ride one thousand miles away from earth because personally you couldn't pay me seventy five thousand dollars for it you are below ninety miles away from earth i guess if i wanted to be an early adopter and i had seventy five thousand dollars to spend i might do it you can ask me when i mean if the whole point is to be an early adopter i mean in twenty years it's not going to be that big of a deal who knows maybe in twenty years price inflation will be such the. that's an incredible bargain but i don't know. that you're wouldn't do it today if money

wasn't a figment of your logic i would probably do it but i would prefer a spaceship it's just so bad that that actually leads to my next question do you think this poses a threat to branson virgin galactic and iran must my favorite his space programs you know these different space tourism where grams that are that are trying to get off the ground again this is all about being an early adopter which has a better cachet going to space in a space ship or in a balloon you know this is no this is versus beta this is you know high definition d.v.d. versus blu ray i think we know who the eventual winner is going to be. see that everywhere is now it is now you know. just a trending vacation destination type thing you know bora bora in the late ninety's as though bora bora but now that's kind of not as prevalent as you see today and i know that sounds of noxious this is a trend in vacation destination but it seems like everyone's jumping on the space tourism banner and all of the known universe except for earth is the trendy

vacation destination beautifully for it's really your own kind of. the world view cabs that would be propelled by a forty million cubic foot helium balloon and an inflatable wing shape parachute within steer passengers to ground once they disconnect from the giant helium balloon now the balloon itself that you're under is actually very thin material and it's designed this way in order to make it go up so high and in fact the balloon is only the thickness of a dry cleaner bags dry cleaner bag which is where they say quote a technical risk might arise i mean wow the dangers associated with this tremendous jimmy does no one remember that. they visited seems like your bird was filled with hydrogen which is highly flammable and i think it was made out of something a little bit thicker than a dry cleaning but i don't know but yeah but in order to go yes obviously it takes . place no matter how you slice and dice it that. you're sitting on the earth as you just. so you want to bora-bora this to send you

a postcard senator thank you from space but moving right along twitter they're flying pretty high right now as well at least in the teen market according to a paper jaffery teen report twitter has overtaken facebook as the social media network most important to teens now twenty check out this chart twenty six percent of teens named it as their most important social site while only twenty three percent said facebook was most important and it looks like instagram has rocketed in popularity as well on issues like facebook's maneuvering to acquire instagram an effort against losing younger viewers with a spot on the no yes i look like they're separated out of the story but yes there was a good move by facebook another story i recently read and this relates to the twitter i.p.o. going forward to is that facebook has tons of patents twitter has very few so that protects the name brand there is there are accusations of you know patent trolls people who just sit on patents whatever but that could be a future revenue stream for facebook itself going forward does twitter have the no

but they have a lock on the market on a new market in a rising market now if we can bring this chart back out this is this kind of blew my mind i don't know if you see the bottom where it says other seventeen percent of fall two thousand and thirteen teams were using other and i mean this is a brand new services have heard of it when you're a young person accidentally watching this show i ask you please tweet at me to let me know what the other is and you know what the other is you know i'm not in this demographic. you're not a teen thirteen but i'm mean but i mean what is that other about the big question because there's clearly something there you know what it is what i have to ask too is you said that you're a first generation adopter when it comes to space but what about social media. ok i love your questions to when it comes to social media i'm proud second generation a doctor i let the kids figure it all out first. through the bug process no i

haven't enjoyed folino it took me a couple years i had an i phone four so i'm a happy second and third generation of back to third well i'm i'm still dying to find out what the other is but that's all we have for you for now however you can see all of this segment featured in today's show on you tube at you tube dot com slash boom bust archie we also love hearing from you so please check out our facebook page at facebook dot com slash boom bust in our teeth from all of us here boom bust thank you for watching see you again tomorrow.

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coming up on our t.v. the n.s.a. leak firestorm keeps spreading worldwide germany is now demanding answers from washington for its controversial spying program coming up next former presidential candidate and former new mexico governor gary johnson discusses the latest revelations and more and speaking of secrets revealed cia documents indicate that for years the pakistani government has known and endorsed u.s. drone strikes so why is pakistan's prime minister jean president obama at the white house this week to stop these attacks. and it's october and that means that breast cancer awareness month is in full swing before but before you go out and buy those pink products to help you fight cancer you won't want to miss our report.