plus we have a very very special new member of the groom but seems to be 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 no 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. and 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 decreased 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 those your headlines for today as always always will 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. and 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 the 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 that aid to think is that. far exceeds. any increase in national income so if we had a problem with that to see it has to go we have a bigger problem now and given the. stagnation we choose now

spreading it's not stealing from east to west the north of the cells of the european union it is. we discuss it in the end of the debt crisis. ok now i want to ask you a follow up to that what are some of the specific risks that could potentially do you 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 if it has to stand behind the bonds the government bonds of. greece

whatever however many remain so and so forth but they cover the puts set is simply nowhere to be seen if you look at investment rates. even germany is almost zero in. time when productivity hasn't grown at all over the last ten years if you compare and contrast this with what's happening in the pretty complete and that implosion in investment in manufacturing are built in employment you will find the best one can say about what's going on is the stabilization is a patient in a coma who is and that the deep common has stabilized there's no. reason to celebrate that state of affairs and things could 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 impact 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 it is very simple. 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 has it has been happening is the european taxpayer 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 in the market and effectively to sift the burden of the good it from privateers from private bond holders onto the shoulders of the european taxpayers including the greek taxpayers so let me put it very simply less than ten less than ten percent of kids who mungo's critic that is in. trade that bombs so these bombs the only reason why they're rallying 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 by a hedge funds those hedge funds usually a 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 that so greece will default on its debt but not on the steps that is owed 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 pos the loose. normally a country which is certain to default on its debts sees its bonds rallying. 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. may call it something

different i remember in two thousand and twelve greece sort of structured the hunt to be in fact the very early goal for hundreds of billions of its debts to private is did we call it the destruction will be found another acronym called the private sector involvement which is you know bit like. that voting for christmas they would not call it the destruction of the structure because you have a ease in deep denial and it is in the propaganda. 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 greece is not 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 first gleam a logical symbiotic what are they going to call it and secondly how is the

way that will be structured going to affect the economies 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 or 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 two 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 direct taxes you know that you know prices go up but the revenues fall because demand collapses even faster so i said to this commission why are you 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 you are ome in particular their own government as to what they should be expecting to be full on them if they don't do as they are told so i think that answers your questions yes. that was young s. a 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 three quick break here's

a look at someone today's closing numbers. for the wonderful strong arming along the bank of new policies i dislike you know. pleasure to have you with us here on t.v. today i roll researcher. i've got a quote for you. it's pretty tough. they were it's

a story. let's get this guy like me you're about guys that are working for the people most missions the mainstream media were pretty much on the bridegroom stage and. they did rather well. everyone and i mean everyone is talking about detroit 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 reuters and 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 americans 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 governments both city and state are pretty good 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 it's of 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 zim pretty steady state. 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 interest rate concerns 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 about thirty plus weeks of heavy outflows for municipal bond funds right now you know what does the economic situation in municipal of you 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 in 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 been dealing with so well in the past and that pension route 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 he's fighting the pension fund. bondholders it's like any

bankruptcy proceeding except that municipal bankruptcy doesn't not have a lot of established law so in many of these cases you're litigating are sort of the first turn who's going to get preference in this and you are the structure so it's 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. you have a big one in the big legal decision in the detroit case is that pensions can be cut. this is a ruling by a federal bankruptcy judge and then that really he says federal law is going to take precedent over the michigan constitution which protects those pigeons it's embedded 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 in a chapter nine you could see others just municipalities possibly consider bankruptcy as an option if they have liabilities they can deal with now i want to mention 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 up till two thousand and twelve and then the bond market started to say and i wrote in to 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 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 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 that carved out special preference so you get bonds held in california new york these are puerto rico buoyancy. many mutual funds own these bonds because he'll to have been very high so the discussion is that possibly there's systemic risk associated with the downgrade from investment grade to junk status from 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. here and you had the problem you

know they had this is the same issue that detroit had. contracted people left to another you know 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 very best that enough mr edward harrison thank you so much for being here and now some of you may know ed from his fantastic finance economy tech blog along with his past appearances here on r t but he's also now 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 who are you where you're from tell it tell the press. really excited to be here it's great and you know we're doing a great show. yeah we are. turning my background which is you know international 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 . 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 that i don't want to just talk about because we always only talk about the point i want to talk about queen. 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 do. to your sister you know any five languages too i should add that. you have to say when i when i heard about coin your words i really had to laugh i thought it was actually kanye west who was who was getting into big oil sort of like the winkle vi were and so when i get into this thing of my own currency you have when you know when to sell sell sell sell what is it what is it you know basically the way i look at big 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 there his lawyers and lewis and the sort of the first step in the whole in the wake of i do that with facebook there is that there is some eerie similarities here and now on 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. you know it was interesting because i was just thinking as you said. that well and i say actually i didn't like was raised at the end as right yeah i know everything but you know i think that the europeans they don't like it because basically you know state money you know the euro's been having its own problems and so here you have these cryptocurrency which are acting as some sort of weird you know alternative state money they obviously don't like but here's another thing is

that you know this is true the there's a speculative bubble here that potentially could. be disastrous so i think that they are legitimately warning their citizens that hey if you get involved in this we don't got your back and through your own risk if you will some 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 answer you definitely weren't different. that's all for now but you can see all segments featured 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 slash combust r t you can follow me at aaron eight and add at. a ever an h. on twitter from all of us here but thanks for watching c n n tonight.

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tribal groups in iraq set up step up to drive out radical islamist militants while the embattled government backed down is offered help by both america and iran. hundreds of complaints have been logged in america's energy boom states because of water contamination allegedly caused by fracking and other drilling methods but look at why we rarely hear about. this e.u. nations deal with debt by joining the great european fire sale we look at whether it's actually helping patch out national budget. hello and welcome live from moscow you're watching our g internet.