wealthy british style. tight right. markets why not. find out what's really happening to the global economy with mike stronger for a no holds barred look at the global financial headlines tune into cars a report on our.

there i marinate and this is boom bust and here are some of the stories we're tracking for you today. first up did some big name banks intentionally cheat clients following the two thousand a financial crisis the government seems to think so well tell you all about it coming right up and also yawn as a bar of talk is joins me to talk in euro zone depth rommel wall kate long weighs in on the mess the palette the madness plus we have a very very special new member of the boom bust him sitting down with me in today's big deal and it's quite a big deal you won't want to miss it and it all starts right now.

first up did some major wall street banks deliberately cheat clients in the years following the financial crisis well a federal investigation is looking into just that regulators are investigating of traders and know we only mispriced a certain type of residential mortgage backed security from two thousand and nine through two thousand and eleven they're trying to determine if this was done by artificially manipulating the value of the bond in order to buy or sell the investment now subpoenas have been sent to several firms including barclays citigroup deutsche bank goldman j.p. morgan r.b.s. u.b.s. morgan stanley all the big boys now the investigation is still in the early stage

and may not lead to any type of prosecution. elsewhere thanks to a boom in u.s. oil production america's trade deficit is the lowest it's been in four years from october to november of twenty thirteen the u.s. monthly trade gap to crease by five billion dollars reading some economists to increase fourth quarter growth estimates in the u.s. now thanks to rising production and shale oil the energy information administration predicts that u.s. oil output for twenty fifteen could approach record highs of nine point six million barrels per day numbers not seen since the one nine hundred seventy s. now america's growing energy industry has increased appeals to the obama administration to relax controls on the export of crude oil obama has already given the go ahead on some exports of liquefied natural gas however he still has strict controls in place on crude oil that have remained in place since the one nine hundred seventy s. . and finally retail sales in the eurozone have had

a surprising surge according to statistics agency retail sales rose by one point four percent from october twenty third and were one point six percent higher than in november of the previous year this is the largest rise in a single month since november two thousand and one and comes as a major surprise now just last week nine economists surveyed by the wall street journal said that they expected sales to rise by just zero point one percent. well there you have it those are headlines for today as always always we'll be following these stories and keeping you posted on all the latest. greek bonds outperformed all other countries in two thousand and thirteen which now have everyone screaming recovery however if one looks at the debt on the ground it's not so good more than a quarter of the population in greece is unemployed yanis varoufakis is

a professor of economics at the university of texas austin. an expert on the european sovereign debt crisis i spoke with him earlier about the situation in both greece and the euro zone and here's what he had to say. yan as that european sovereign bond markets are rallying is the european sovereign debt crisis over. by any stretch of the imagination it really is not if you look at the trajectory of debt to g.d.p. ratio in most european countries including some of the surplus countries you will find that aid to think of is that it is far exceeds. any increase in national income so if we have the problem with that to see it has to go whatever because problem now and given the. stagnation we choose now spreading it's not the wings from east to west the north of the cells of the

european union it is. we discuss it at the end of the day. ok now i want to ask you a follow up to that what are some of the specific risks that could potentially d. rail this incipient recovery. well let me just begin by saying that i do not see any recovery what i see is the nation in the surplus countries and continuing deterioration in the periphery what has happened and has given us a semblance of stability of stability even the recovery is that the money markets have decided to shift their attention away from the euro zone simply because they're not convinced that the european central bank really in the end come what may it it has to stand behind the bonds the government bonds of. greece whatever however many remain so on and so forth but they cover the puts set is simply nowhere to be seen if you look at investment rates. even germany has almost

zero income. time when productivity hasn't grown at all over the last ten years if you compare and contrast this with all that's happening the pretty complete and that implosion in investment in manufacturing aren't built in employment you will find the best we can say about what's going on is the some stabilization is like a patient in a coma who is and that the deep common history be like there is no. reason to celebrate that state of affairs and think you'd get far far worse given the situation that is unfolding in the credit markets of asia and in particular of china i can assure you that there are people in the european central bank in frankfurt who are having one sleepless night after the other wiring about the impacts of. trouble in china on the european markets

now greek sovereign barnyard they've really been rallying lately in fact greek bonds they outperformed every other nation in two thousand and thirteen does this suggest that the worst is over for greece i would imagine you're going to say no but i want to know why. there isn't why this is utterly correct. hugely irrelevant. is a very simple reason greece hasn't issued any government bonds since two thousand and ten none not one. and moreover over the last three years of the bailout what it is that has been happening is the european plex player has been pumping money into a good government which has been using it effectively in order to replace the move to withdraw whatever government bonds existed to the market and effectively to sift the burden of the good it from privateers from private bondholders onto the

shoulders. the european taxpayers including the greek taxpayers so let me put it very simply less than ten less than ten percent of the. debt is in. traded bombs so these bombs the only reason why they're running is because even though everybody knows that greece is bankrupt and if we default again and it's on it's that everybody at the same time knows that it is not worth the governments why to default on the private bonds why because they are written in english and all and they're mostly own a hedge funds those hedge funds are usually vulture hedge funds that argentina for instance knows very well and these hedge funds will take their government to the cleaners in new york and london if the government defaults on those bonds which are very small percentage of greek that greece will default on its debts but not on the steps that it owes to the private bondholders but on its debt that the owes to the

european taxpayers and to the international monetary fund this is why if you're holding a government bond you're quite happy you know you will be paid therefore these bonds are rally and we have this pasta loose. normally a country which is certain to default on its didn't see its bonds arriving. right now some economists they suggest that restructuring in greece and portugal it's all but inevitable however greece has a primary surplus a budget surplus if you exclude interest costs and portugal is looking to leave the troika program next year the troika being made up of the i.m.f. the e.c.b. and the european commission now is it possible that we could get through this crisis without more debt restructuring or no. no. general may call it something different i remember in two thousand and twelve greece the structure of the hunt to be in fact very little golf one hundred billion of its debts to private is did we

call it the destruction will be found another that critical of the private sector involvement which is you know like. that is our voting for christmas they would not call it the restructure because he's in deep denial and it is in the propaganda mode the purpose of which is to hide the tools from its own people but the fact is that none of those debts can be repaid. islands for that matter not. even spain's or italy's that is going to be the structure the question is not whether there is going to be a star so the question is twofold firstly to my logical symbiotic what are they going to call it and secondly how is the way that we be structured going to affect the economy is of europe. now i want to ask you is the e.u.

using greece as a whipping boy if you will to show everyone else what happens if you don't toe the line where is greece really a separate case. well let me tell you an experience i had in brussels about a year a year and a half ago when i was talking to one of the commissioners whose name is not going to be mentioned here. i put to this commission the point that it seemed to me as an economist quietly idiotic to inquiries. in a country whose recession is skyrocketing and the point i was making was that it's a simple point of microeconomics that you know when demand is collapsing if you increase the tax rate the veit even in direct taxes you'll end up with fewer in the . prices go up with the revenues fall because demand collapses even faster so i said to this commission is that why you're doing it isn't the european union's objective to increase the tax take not to push it down and let me tell you what the

answer was you're quite right we know we're doing that but this is a lesson that we're trying to teach it if we are ome in particular their own government as to what they should be expecting to be full up on them if they don't do as they are told so i think that answers your questions yes. that was a young us vera fokus economics professor professor at the university of texas at austin. still had financial blogger kate long joins us live from new york to talk about bongs depressed detroit and problems in puerto rico we all want to hear what she has to say about that and more plus then kanye west goes viral see the currency that he says he's not backing not backing and we have a very special introduction for you today in today's big deal but before we had to a quick break here's a look at some of today's closing numbers. well

. it's technology innovation all the developments around russia we've got the future are covered. 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.t. question or.

wealthy british style. time right. there right. market why not. find out what's really happening to the global economy with mike stronger no holds barred look at the global financial headlines tune in to conjure reports on.

everyone and i mean everyone is talking about to trade it is the largest city ever to file for bankruptcy in america and over the last decade its population has fallen by twenty five percent the lowest level since one nine hundred ten and many believe there's more pain to come now kate long is a financial writer who penned the widely followed blog muni land at reuters and kate joins me now from our new york studio to talk about detroit and also hone in on puerto rico potentially the next big municipal bond disaster hi kate thank you for being here today now i want to start off by asking america whitney a couple years back she said that we've seen large scale municipal defaults in the hundreds of billions of dollars and there have been some problems but nothing on the scale of what she suggested why not. generally the. status of local government both city and state are pretty good in the united states i would say ninety seven percent of them are in really really reasonably good shape

but we have hot spots in a few places detroit was the obvious one which we've been watching for a long time puerto rico is now on the radar because it has an enormous amount of debt out about seventy billion dollars and it's a small country which like detroit has had a population leaving coming to the mainland and the incomes of the people there are very low but generally across america everything that simply studies. now municipal bonds are coming off their worst year since one thousand nine hundred four is this a reflection of the underlying economic stress which may continue through twenty fourteen. it's more related to interest rates when ben bernanke last may's made comments relating to the tapering of quantitative easing municipal bond yields shot up you know in some cases almost doubled. you know the market had been really steady for about two years and that just really rocked the market so the losses there you're seeing for the most part outside of puerto rico relate to

more the interest rate concerned and what drove that was a lot of retail investors in mutual funds said i'm not taking these losses because you get losses in mutual funds as rates go up and we had heavy heavy we've had thirty plus weeks of heavy outflows for municipal bond funds right now now what does the economic situation in this apology mean in terms of job creation by governments. it's been flat since basically zero nine state and local hiring has been relatively flat you have between those two about sixteen million people the united states employed in those governments with the majority of them at the local level and a lot of that is education so that's funded by school budgets which is property taxes so that employment has remained pretty flat you have less important at the state level just because states don't you know provide directly a lot of services to people and it's just been pretty flat i personally don't see

any recovery in state and local employment for a long long time both both levels of government are faced with really high pension burdens that they need to deal with they hadn't necessarily been dealing with so well in the past and that pension really liability crowds out a lot of current spending that you might see through employment. now this is a big question but what about detroit what's happening there. so detroit. you know there's just no tax base in detroit and they have a municipal infrastructure that had built up over decades and even the size it was it didn't provide many services and in many cases took on debt sometimes to patch deficits. the big issue in detroit in the bankruptcy proceeding is the pension obligation bonds that were taken to fill a hole again this pension liability and the swaps that were taken out to hedge

those because the pension bonds were variable rate bonds. it's a fight it's just really just a dog fight now in the courtroom of judge rhodes he's of the federal bankruptcy judge there you have bond insurers fighting the emergency manager kevyn orr who's fighting the unions who's fighting the pension fund. bondholders it's like any bankruptcy proceeding except that municipal bankruptcy does not have a lot of established law so in many of these cases you're litigating this on sort of the first turn who's going to get preference in this and you are the structure. just been pretty pretty intense fight out there many of us are watching of course very closely we are all watching and it begs the question are there any lessons that we can draw from detroit's problems that apply to other municipalities in trouble. yeah the big one the big legal decision in the detroit case is that pensions can be cut. this is

a ruling by a federal bankruptcy judge and in that really he says federal law is going to take precedent over the michigan constitution which protects those pigeons it's imbedded in michigan constitution so you have this legal tango between the rights of pensioners that are and trying to in their state constitution verses the. several bankruptcy law if that prevails and pensions can be cut in a bankruptcy proceeding the chapter nine you could see others just municipalities possibly consider bankruptcy is an option if they have liabilities they can't deal with now i want to it's quite significant and very significant but i want to switch gears a little to up puerto rico now it's the u.s. territorial government with some serious problems can you explain to our viewers what's happening in puerto rico today. so in two thousand and six puerto

rico lost a congressional tax preference they had that allowed us corporations to go down there and basically earn income and shelter it from federal income taxes congress took that away once that was taken away there was a massive amount of pharmaceutical manufacturing down there some of that left and went to lower tax jurisdictions and since that time the puerto rico economy has been in recession essentially a lot of that. contraction of g.d.p. or g.n.p. was papered over with bond borrowing that the government did and spend very heavily and i look back to the numbers this morning and in two thousand and six seven you had the commonwealth issuing six to seven billion dollars of debt on an economy that's about ninety billion so you can see that they were really propping up the economy with that issuance so that happened basically have till two thousand and twelve and then the bond market started to say and i wrote into march of two

thousand and twelve you know this is not sustainable in fact i wrote it was like greece was the greece of the caribbean. and in fact since that time the bond markets have tapered their access to puerto rico and now they're essentially shut out puerto rico is rated triple b. investment grade by all three major rating agency all of which have told puerto rico they're on rating downgrade watch which means within the next thirty to ninety days that the bonds could be downgraded to junk well the problem with puerto rico is. the problem with puerto rico is it's a very odd thing but puerto rico bonds are triple tax free in every state. of america it's the only issue where that has carved out special preference so you get bonds held in california new york these are puerto rico barnes. and many mutual

funds own these bonds because yields have been very high so the discussion is that possibly there's systemic risk associated with the downgrade from investment grade to junk status for puerto rico that's interesting you know puerto ricans there we've been in droves economic opportunities obviously dry up isn't this going to only make problems more difficult. and you had the problem you know they had this is the same issue that detroit had. contracted people left with other people that had good skills and were high you know medium high earners left in one other places it's the same exact thing in puerto rico. long thank you so much for your time that was long financial blogger at reuters now it's time for today's big deal.

joining me now for today's big deal is the newest addition to the remember that enough mr edward harrison. some of you may know ed from his fantastic finance accounting tech blog along with his past appearances here on our t.v. but he's also now a permanent producing resident here on boom bust and i personally could not be more excited to have him here welcome and i first want to start off tell us a little bit about yourself what the who are you where you're from tell and tell the press. really excited to be here it's great and you know we're doing a great show definitely as we are. turning my back around which is you know international from the i was a diplomat when i first started out working then i got an m.b.a. to move into finance and so that's where you know the bulk of it is but i'm also really interested in technology i work for yahoo a lot of telecom deals but i was in banking and so i think it's great that we have a great show where we talk about all these different topics it truly is and we're

hoping that right out there loves it now i want to switch gears we're going to big deal it now so let's talk cryptocurrency because we have cryptocurrency here and i don't want to just talk about because we always only talk about that point i want to talk about queen of the west not to be confused with conway you know kanye west however the kanye west inspired cryptocurrency now i got to ask you what is. what exactly does it dude. you guys do you know any five languages here i should add that. i have to say when i when i heard about coin u.s. i really had to laugh i thought it was actually kanye west who was who was getting into big point was sort of like the winkle vi were in the one and i get into this thing of my own currency you know when you know when to sell sell sell sell what is it what is it you know basically the way i look at coin is the coin is an algorithmic way of having some sort of system where you know people who are anonymous can do things with one another and you can do this with currencies or

anything else on the internet so basically you know you can replicate anywhere and so the question is whether or not. people will flock to this particular system or not and so you know the people who are doing kanye west. are using kanye west in order to you know going to syria he's very good that kanye west actually what i've heard is that he he told them cease and desist he sent them as he had their his lawyers and we move into sort of the first step in the whole in the wake of i do that with facebook there is no there is some eerie similarities here and now on the subject of cryptocurrency european governments not a fan of crypto currency and it's not like the u.s. government is quickly jumping on board but they're thinking about it they're testing the waters if you will but why do you think our friends across the pond are so anti. you know it was interesting because i was just thinking as you said that.

it was raised by the n.s.a. . but you know i think the europeans don't like it because basically you know you know the euro's been having its own problems and so here you have these cryptocurrency which are acting as some sort of. you know alternative state money they obviously don't like but here's another thing is that you know it is true the there's a speculative bubble here that potentially could. be disastrous so i think that there are legitimate warning their citizens that if you get involved in this we don't got your back. if you will real quick we have ten seconds cryptocurrency it's going to crash and burn are going to thrive i think that they will crash and burn but then they will continue on after that happens i love that and so you definitely were different. that's all for now but you can see all segments on today's show on

you tube at youtube dot com slash rambus r t we also love hearing from you so please check out our facebook page at facebook dot com. you can follow me at aaron . aid and ad add in a edward n.h. on twitter from all of us there but thanks for watching the next time that i've. got a quote for you. it's pretty tough. today where it's not a story. it's just this guy like you but smear that guy stead of working for the people most missions the mainstream media were pretty much on the bridegroom's didn't. they did rather well.

he's an american business icon whose brazen outspokenness is always at the top of the headlines his disgust with politicians is led him to consider running for president himself love him or hate him he can make or break someone's future with two words you're fired. the one and only donald trump is next on politics a little larry king. live on the ticket with larry king one of my favorite people of all time the stomach trump we go back a long long way i have to tell you we usually have a major problem let's go right into it word by the way it trumped all of the top of his building overlooking his city everywhere you look from.