hello there i marinate and this is boom bust here are some of the stories we're tracking for you today. j.p. morgan city of sideline their cheap currency dealers in london following allegations of currency market manipulation we'll tell you about the chat room yes that's right chat rooms that got them into some very hot water and the man who personified brazil doom is now busted. wow that's what's hard to say but tista built a financial empire but yesterday his flagship oil company to play in the biggest bankruptcy in lot of american history will talk about how all the chips came tumbling down and we want a man who cuts through the jargon with yeah good old. matt to evie explains how

a lack of transparency is screwing over pensioners plus the only inevitable thing in life are death and taxes correct well martin sullivan explains the places where companies can avoid at least one of the two latter in the show than well now it's with a spooky tale that the prison excuse me of the prisoner's dilemma on this whole we know edition of the big deal but that. j.p. morgan and city have benched their chief currency dealers and senior for extra. at

major banks throughout europe have been put on leave and what seems to be a growing trend following allegations of currency manipulation in the three point five trillion trillion with a t dollar a day global f.x. market now bloomberg reports that regulators are focusing on an intense instant message group where these traders were using basically techs to communicate with one another they were allegedly i m e n n information about their clients orders and then making positions in the market making the market move this all happened over a three year period so does this chat room action amount to market manipulation that's the big question and that's what regulators in london are trying to suss out also it's finally out in the open facebook is for old people true to fact now the social networking giant admitted wednesday that the youngest users are jumping ship and losing interest in the site altogether now facebook c.f.o. david eversmann addressed the matter during an earnings call this week and what was

the company's most candid admission to date on the subject of facebook's teen exodus now the site's active daily teen users drop considerably however the good news is that facebook is had is looking at some stellar third quarter earnings performances now an impressive overall engagement engagement rate is what came out of those third quarter earnings and brazilian entrepreneur a key because they got it right that time nailed it who once proclaimed that he was on his way quote on his way to becoming the richest man in the world i thought it was carlos slim thing now has now filed for bankruptcy guess he won't be carlos slim after all now the filing marks the largest corporate default in latin american history after running out of cash and losing ninety eight percent of its value but he says oil firms giant o.g.'s filed for bankruptcy protection on wednesday now batiste was in the process of negotiating with creditors after defaulting on a forty five million dollar bond payment in early october creditors which. included

major players like black rock black rock pimco and the ontario teachers fun now but used as shipping company s x is said to be on the ropes as well not a good day for battista and meanwhile brazil's version of the f.c.c. known as the c b m is looking into violations of disclosure rules as well tough to be battista well there you have it those are some of the top stories making headlines this thursday october thirty first happy always by the way. now as we mentioned but spectacular empire building fail left bondholders looking at a tremendous financial loss losses which included a five hundred million dollars stake invested by the ontario teachers' pension fund one of the larger pension funds around now controversy surrounding pension fund investment allocation and alleged mismanagement has been

a divisive topic lately and i had the pleasure of sitting down with matt tell you the rolling stone contributing editor to discuss this very issue i started by asking him if avoiding alternative investment platforms all together may be the best move for pension funds. i just think that there should be a proper balance and i think that the fees should be reasonable and they should be fully disclosed i think those are the main issues if you take a state like rhode island for instance where were we looked they went from zero percent invested in alternative investments to you know well over twenty percent in a single year and they're paying you know for a relatively small fall in the seven billion dollars fund they're paying over seventy million dollars in fees every year which is already just. as much as a hundred or two hundred times the cost of a simple index investment do you think that was more just gina ryan mundo going wild with her fund then actually. oblon for pension funds as

a whole. no i've stove's we've seen this the same issue in numerous states. kentucky had a similar problem. california has had problems with with investment fees as many as twelve different states have statutes that specifically exempt alternative investments from freedom of information type laws so people can't get information about how high the fees are or where they're invested so there are problems all over the country obviously were island is kind of a petri dish sort of state where they're experimenting with certain kinds of pension reform but these problems are being seen all over the country now you mentioned in your article that the fees to these pension fund managers roughly tracked the benefit cut to pension fund workers did the hedge funds performance improve over the alternative probably an index of mutual fund. well it depends on how you how you look at it i think last year actually the hedge funds

underperformed in rhode island compared to some index investments. but it's not so much how they do in the short term it's how they do over very long periods of time pensions are the ultimate long term investments the whole point of them is that they're supposed to be extremely long term and the whole idea of investment is not in these kinds of funds is not to be constantly making adjustments and constantly making redemptions over time hedge funds will lose to simple index investments and something like the stock market. even that least that's what my sources tell me i talked to somebody who worked in illinois managing state pension funds there and he said you know the way he put it to me was look there's just not enough efficiency in the market to make it worth it to us to pay one hundred or two hundred times the cost for a private equity fund or. do you think this is kind of the yale model run amuck

i think it's i think it's more of just simple old school political graft basically this is a situation where it's kind of an unregulated part of the political landscape in the post citizens united universe. there's an extraordinary opportunity for alternative a new investments to. influence the people who make these decisions in the states. they're able to. give an extraordinary amount of money to politicians who who make these decisions and to invest in five a one c three type organizations and in return they're able to get enormous investments of public money and i think i think that's more the problem i don't think this is as much ideologically or philosophically driven as it is just simply politically driven ok now is that you mentioned this before that part of the problem is a lack of transparency in fees to the public and performance that does not allow

the public to make intelligent decisions about how the money is allocated what do you think would be a better solution. well i think they should be completely open with with. especially the members of on the pension boards typically what you have in the states is you'll have one or two union reps who sit on the pension board and there's no requirement that that anybody on most of these boards have any kind of financial experience so typically the state will hire an outside consultant who will sit to simply sit them down and tell them here's who we think we should invest with and here's why most of the time these people who are sitting on these boards don't know enough to make informed decisions i think unions are slowly slowly coming around to the idea that they need to put people on these boards who were educated in this material who know how to read you know these spreadsheets and these offering them around and know what to look for in terms of fees that's not

the case now but i think it will be in the future and i think as long as states make full disclosures and as long as you unions and pensioners know what they're getting into when they make investments i don't think there's going to be a problem ok now warren buffett he essentially runs a highly concentrated long only had fun you have people trust him the people trust him because he no longer charges fees which is kind of interesting and he's warren buffett so he can do that is this the only had you believe a pension fund you kind of be invested given your position. well i don't know if i don't know but i don't know about no fees at all but i just don't think it should be two in twenty you know for four. retired. firemen and policemen and teachers and people like that i just don't think that they should be paying that kind of the fee especially when they're being asked to make commensurate cuts in their own benefits. you know the there obviously can be

alternative investments and they have they do have something to offer and as we saw with two thousand and eight when states are up or over invested in the stock market and they don't diversify that can be very dangerous for state pension funds so there should be some allotment to two alternative investments that just should be fully disclosed the fees shouldn't be extraordinarily high. and you know people should know what they're getting into. that was mad tell you the rolling stone contributing editor. countries across across the globe are ducking it out duking it out rather to see who can provide the most attractive conditions for multinational companies to set up shop that's right we're talking tax policy plus the phrase that makes people eager just for each other over in today's big deal you won't want to miss that sticker out.

i am the president and i think a society that case big corporation trying to convince them to can do. better trying to get. all about the money and vasily that for politicians writing the laws and regulations to tax the bankers. just too much is a society. that. talking

about the same story doesn't make it news no softball interviews no coffee says some tough questions. and. i would rather as questions to people in positions of power instead of speaking on

their behalf and that's why you can find my show larry king now right here on r.g.p. question for. now don't call it tax avoidance it's more like aggressive accounting and the world's biggest companies are all taking advantage of local laws to pump up their bottom lines now you may remember apple c.e.o. tim cook explaining to congress how the beloved american companies skirted paying taxes on their profits in cupertino and anywhere else for that matter now he said accurately that these practices are totally legal so how do they work the cayman islands is a famous tax haven but what about the tropical island of ireland yeah for tropical

martin sullivan is the chief economist at tax and analysis the trade publication that looks at the nitty gritty of tax policy and he joined me earlier and i asked him about his kind about asked him if countries will continue to compete against one another to bring companies to their shores or whether the all the nations can just come to a consensus regarding corporate tax rates. that's nice but i don't think it's ever going to happen i think what we're having is a natural convergence you know when i started doing this a few decades ago we were talking about forty and fifty percent tax rates and now it doesn't matter if you're a liberal or conservative everybody recognizes that the rates have to come down into the twenty's in the united states. and then the rest of the world is is also lowering their rates but what i am in favor of is everybody being reasonable it is not so terrible from a u.s. point of view that ireland has a twelve and a half percent rate versus hopefully after tax reform we have

a twenty five percent rate it's the all the avoidance techniques that go around that that really. accentuate the differences and give. very large tax breaks to a few companies while leaving others out the cold. it's a mouthful but the. we need to just sort of get rid of the extremes where there are very low tax rates just for some corporations while other companies like holy domestic companies are retailers or service companies are paying very high rates of tax how do you believe there should be no tax on corporate profits well yes in a perfect world there really is no reason to tax corporate profits at a double doubly they're taxed once at the corporate level and then they are also taxed again when the corporate shareholders receive their dividends and so everybody acknowledges that this is every economist acknowledges that this is

a very inefficient system and it's the first thing we should do to improve our. economic growth is to get rid of this however politically it's just a nonstarter and so what we're trying to do is trying to think of ways given the fact that we politically are never going to get rid of the corporate tax how can we make it fairer. and less prone to abuse now you know what is the difference between the effective tax rate versus the statutory tax rate that comes up a lot and if you're on line between. well the one is very easy to understand the other is very hard to understand the statutory rate is the rate that you see written in the in the statute in the tax laws so in the united states that's thirty five percent in ireland it's twelve point five percent however we all know that. nobody is going to pay thirty five percent of their income in tax because of all the different deductions and exemptions and so there's usually

a wide divergence between the thirty five percent actual statutory rape and the effective rate of what you actually pay as a percentage of profit so it's usually much lower so. the we want to we want to lower both. to improve economic efficiency but there's a lot of debate. among the partisans who will point to you know the conservatives say thirty five percent is too high and the liberals will come back and say well if it's the effective rate that matters and both matter went to ireland become this tax haven well it's a long story perhaps some of your listeners are better acquainted with it than i but it has evolved gradually over the last three decades. the three decades ago was basically at the bottom of the income scale in europe u.s. companies were looking for opportunities as other tax havens like. puerto rico were

closing down and then of course they were looking at the e.u. and all the opportunities that were available there and the high level of education in all the english speakers and so very convenient to their corporate headquarters their european headquarters in ireland. comedy them with lower tax rates so everything just came together very wonderfully about two or three decades ago and then over time as the. world economy has become increasingly increasingly globalized and as more of our economy is about intellectual property and not bricks and mortar you can see there is more of this stateless income sloshing around the system which provided ireland with even more opportunities to be. a leader in competitiveness with multinationals now i have one

final question for you what country today do you believe has this simplistic and most effective tax cut i know that's a lot of question but a lot of your opinion on that is a very loaded question and. it's. i really don't know what she wants one thing is very difficult even for full time experts who follow this every day is it's hard enough just to understand one tax system the united states that's a full time job and then when you ask us to compare you know french to our france to ireland to the u.k. to hong kong to switzerland but different languages different laws and everything is in flux so it's really hard to put your finger on that but i my impression is that it is certainly among the one of the simplest and u.k. is moving towards greater simplicity at a cost perhaps of greater opportunities for tax avoidance so it's always a trade off between those two. martin sullivan is chief economist at tax

and alice says now it's time for today's big deal. welcome to a spooky hollowing edition of the big deal now let's start this all off by talking about prisoner's dilemma one of the most famous examples of game theory and practice now here's a refresher of how it works from every office drones favorite cartoon dilbert. tell us what happened and will recommend a light sentence nice try but i happen to understand a little thing called the prisoner's dilemma is that still you have no physical

evidence of a crime scene so you can only convict is if one of us rats out the others and since we're all aware of that fact no one will read out anyone and will be free and a matter of minutes. i'll tell kurt i told him not to chop but he. said. now the study flagged by the atlantic tested undergrads at stanford with a simple prisoner's dilemma set up with money as prizes now here's the catch for half of the participants they called it community game the other half played wall street game and guess what happened the students playing wall street game cooperated only thirty three percent of the time versus sixty seven percent of the time cooperation from the students playing community a game to discuss is our producer your rachel herz is welcome welcome there rachel is it just the phrase wall street that makes people want to do bad things it certainly seems that way the results of the study point to that and people seem to

have the expectation that when they're playing the wall street game that they have to act in a little more cutthroat of a manner so you would imagine that if that's how people feel like they must do as students the people who are actually on wall street facing the real pressures of being a traitor or whatever they may be are feeling those pressures to a much larger extent and have the incentives that go along with it like bonuses for instance if they act in a cutthroat way but what's crazy about this is that the people didn't get as many prizes they didn't get as much money in some when they didn't cooperate and they knew this going in but despite that playing the game as wall street made them less likely to cooperate even though as i said it resulted in them getting less money there wasn't self-serving i mean can we just attribute this all to gordon gekko greed is good it's his fault wall street the movie i mean i don't know if he came first or of people you know i think he was based on a ton of people who actually do believe that greed was good but yeah that's the mentality and it's not and it becomes this idea but i mean

a lot of this trading is going on not on wall street but all over the place on wall street is just a phrase we use for it so even changing the phrase even if we started calling it nice nice street like cooperation street it's not going to make a difference as long as incentives are. as they are right now and i mean there's lots of streets in downtown manhattan with broad street you know we could call it leonard street let's just pick something a little little prince street all act royal and then you go well repackage it will be a totally to be exact i mean rebranding works some of the touch of great ideas are coming up again we should be writing this down. now moving right along it is holloway and of course and this is kind of interesting the national retail federation says that this year americans will spend three hundred thirty million dollars on costumes for their pets seriously seriously three hundred thirty million dollars. thirty million now this is about people are going to spend six point nine billion in some so in total pet costumes aren't that that much of the total but it

seems kind of cruel i mean look at these pictures to check out looks like it's having a good time it looks like it's possessed by the devil and it's supposed to be a fairy i mean it's just serving to me but there's again all the exhaust that i was looking at and i mean it does show you because you already have consumer confidence right i mean if you're spending three hundred thirty million dollars on something that you know in my mind and i think according to the geneva conventions is considered torture well. this is i little mad owing a lot of that maybe you can explain why or why are people spending three hundred thirty million dollars this year on tax either you i don't know you rachel and tiger is well right i mean well i have to tell you it is interesting i just out of enron happy home you know and he looks happy this is this you have to act as if you really had to he looks like the kind of dog that doesn't get happy if. you know what i actually did the math how much just this before tiger was became

a part of my life i did come out to see how much this would cost annually and really what i didn't anticipate was how much i'd like dressing him up this is a ridiculous thing i admit this is not the best. you know they need to find a.j. i didn't find friends and i find a friend of the cost and i don't want to look at it that you know i have and it's more it's a luxury item at this point i don't think it's going to luxury items for humans i can't imagine what a luxury item they are for but what i find most interesting too a lot of the clothes that are already in the market it's not a market that it seems like it's over saturated yet because there are so many costumes that are not available and i shouldn't say costumes it's not like this is just a hole in and they want to go to you're going to have tiger all year round yeah and go to me yeah i'm going to like over time and i mean he's no vile tales and i think that's what i think is interesting you know it's not an oversaturated market it looks like because there are there's always a need for these and there's still room for growth and we don't i mean doesn't

tiger have to see those he does see those in room for more in the room together more the market was there and it also didn't i mean you are putting a lot of money into the economy this way you know to to see those for tiger that shows you have a lot of consumer concert a lot of consumer confidence and i know what tiger he went in there and bought his own chips either so and there's something about you know what is it and anthropomorphism giving human like characteristics to animals and it's very it's really fun if you know what's wrong with us this is we need a psychologist to discuss why why we had to say she had a lot of people do it and it brings a lot of satisfaction it does bring a lot of joy to the world this time of year i think that ever insulated when they see a dog in costume well there you go you're welcome except for the dog or the dog that's all for now but you can see all segments and tiger featured injudicious show on you tube at youtube 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 our teeth from all of us here boom bust thank you for watching see you tomorrow.

you know it takes all the running you can do to keep it in the same place said the red queen to alice it takes all the birds in you can do to keep it in the same place said the banks are to bernanke it's eggs all the working you can do to keep in the same place said the neal futile facts to the chumps who have to work for a living but i say not only does it take all the running printing working but it also takes all the bombing stealing and defrauding spoiling and shaking begging and taking to stay in the same for complacency. it was a. very hard to take a. while to get along there was

a lot that he never had sex with her hair no. one. was. going to. put. one of the few to the polls.

coming up on our t.v. it seems the catholic church and the pope have caught the eye of the n.s.a. and italian magazine reports that the n.s.a. was spying on the vatican and the papal more on the holy spying revelations ahead and in syria and enforcing deadline on chemical weapons was reached weapon inspectors say that the syrian government's chemical weapons have now been destroyed or rendered inoperable coming up we'll look at the latest coming out of syria. and on the internet there is a video of a marine calling out senator john mccain marine criticize mccain for supporting us intervention in syria calling for the politician to be arrested and tried for treason we'll speak with a marine about his actions later in the show.