there i marinate. those are the stories that we're tracking for you today. first up dr james bulger the joins me on today's show to talk about predators states which also happens to be the title of his new book then outspoken british politician nigel kharaj gives the prime minister and trying to some are a proverbial smack you won't want to miss that's pretty funny and in today's big deal at harrison and i talk mismanagement misuse and abuse of government funds tell some enough and it all starts right now.

british politician and u.k. independence party leader nigel for raj has never been called a wallflower and in a strongly worded speech to the european parliament on wednesday kharaj made his views on the president the prime minister and tennis and maurice x. but will listen to me clear take a look. around him is this up sabras and you tell us that you represent the sovereign will of the greek people well i'm sorry but you're not in charge of greece i suggest you remain even rebrand your policy it's called mutual for see i suggest you call it democracy because greece is now full run contro you can't make

any decisions you've been bailed out and you've surrendered democracy the thing you will come free invented in the first place and you call it that mates who now during the diatribe we argue that people don't want a united states of europe but in europe of sovereign states trading and working together for asure also says the. elections would mark a watershed in the battle for national democracy. elsewhere some economists are predicting an approaching oil goulet which they say may push the global economy into deflation georgia bank estimates that crude oil is now the most richly priced commodity in the world america is on track to overtake saudi arabia as the top global producer of oil by two thousand and sixteen and this year the u.s. accounts for more than half of the world's non opec oil supply us shell will add one million barrels a day to the global supply while libya will also increase shipments and now with iran coming out of hibernation some believe that this will push opec standby

capacity to levels not seen since the depths of the financial crisis in two thousand and nine the u.s. energy department says u.s. oil imports will drop five point five million barrels by next year turning the world's eighty nine million barrel a day market said now those bullish on oil say that the global economic recovery is strong enough to soak up rising supplies. and finally federal federal regulators are already easy off the gas on the vocal role this after the american bankers association threatened to sue federal regulators say that they will now allow smaller banks to hold certain c.e.o.'s of trust preferred securities the a.b.a. said the provision would have forced two hundred seventy five smaller banks to take a six hundred million dollars hit to capital the change would apply to any bank with assets under fifteen billion dollars. well there you have it as always we'll

be tracking these headlines and keeping you posted on all the latest. professor who teaches at. nomics at the university of texas is the son of john galt birth author of the great crash of one nine hundred twenty nine and a must read for economic historians now when we last spoke to james galbraith in november our interview sparked huge interest but also huge questions questions about national solvency and sovereign defaults so when and how exactly did national solvent see become an issue earlier today i spoke with dr gahl birth about the national solvency issue and about his book at the predator state i started our conversation by asking him about money legal tender without any intrinsic value and i asked him where specifically money derived its value this is what he has. though

i'm not aware of any significant economy that does anything else that it will or. money is a part of generally speaking the national economic system so that it gets its authority from the. front from from very state from the promise that it is a legal tender that you can use it to retire any debts that you may have whether a private debt to another individual or company or or a debt to the state what you can use it to pay your taxes now is fear of money's position is the only legal tender within an economy important to maintaining its value as a medium of exchange. yes of course it's it is the foundation of that value essentially you know can you expand upon that a little. well if you. were not able to use your national currency to pay debts that were contracted

a particular country. there would be very good reason to go and hold somebody else's currency you might expect that. there would be a general flight for international currency into. into another countries and that would be that would cause problems does cause problems for countries where there is some doubt about either the stability of the currency or the willingness of the of the rest of the world to hold it that actually means well it's my next question what about money as a store of value now if citizens lose faith in government won't they turn away from state money as a store of value altogether and thus a roading the value of money. so it can happen sure it does happen it happens and and particularly in countries that are not all large economies of the world system because they have their citizens who have the option of take hold of their wealth and other in other countries assets and so that is the system which tends to

benefit the large of the largest of wealthiest countries at the expense of some of the others now i'm going to read a passage from your book the predatory the predator state and now you're a quote a coalition of relentless opponents of the regulatory framework on which public purpose depends where the enterprise is major lines of business compete with or encroach on the principal public function of the enduring new deal now i got to ask you would you explain this core to me. ok. the major argument of that book and the. case that i make in the. in that protectionist is twofold one is that our economy is built around. the public institutions that were created in the twentieth century into big waves one of them in the new deal that was social security and other institutions like

the minimum wage and the fair labor standards act and a great many other things that gave us the modern america government and the second wave was in that i said sixty's maybe under lyndon johnson when we began to get major elements of the health insurance medicare medicaid and a quite a number of other things. that we needed at that time and those institutions are often treated by the economists as being. the supporting structures peripheral if you like to the core function of the economy but i would argue that in the world in which we live. retirement security and health security basic public infrastructure all are central institutions of economic life they are they are fundamental to the way we function interact with each other and one of the things that we observe and what i call the predator state is that a lot of our politics turns on private entities who are

historically enemies of these institutions and who would like to see the rollback or who would like to see the redesigned so that particular private sector entities can make additional money out of them and one can see this in the way in which recent additions to the social structure social security system have been managed to an example of this is medicare part d. which came in in the bush administration which was a drug benefit itself a significant extension to the system of social protections but designed in a way that it made it very very lucrative to the big pharmaceutical companies that's just a nice example of how. the the what i call the predator state functions now why are we see this dynamic within the united states today. because we have the large public institutions and so they become

a. a target if you like an object of interest to major political players i think that's clear enough another big area of course is the military budget we obviously need to have. a. an adequate. but there are all kinds of players here whose object is. who are at least conflicted and who are advocates of weapons systems which are they have no clear relationship to the actual security dates of the country so you see that in the news just see that in every and any country in which you have a large government sector and private players who are interacting with the government you're going to see that kind of a dual interest and conflict of interest being. at play here how do you reconcile the predator state dynamic with calls for government activism and what i'm

basically asking is once the predator state siphon off any gains from government spending to special interests. well it doesn't siphon off all of them and it is given how small a number of the of the private sector players actually are. that may not size and offer a very large fraction of the of the total flow of benefits so again in the case of medicare part d. i don't doubt that the drug benefit was great value to a large part of the of the elderly population but as i say it was designed in such a way that part of that. bit excessive part of it was shared with with with big pharma so the answer is it's always going to be a mixed bag and the way you have to deal with it is to focus on how effectively these programs are run and how. how focused the benefits are

on the population that really deserves to have them a really nice example of this is proposals to privatized social security. social security is run the basic retirement benefit in the extreme really efficient way by federal civil servants who are not very numerous and not that highly paid and who do you know an excellent job with the basic information management that's. if you put that in the hands if you put the funding of that the management of the funds in private hands you would be paid waltz sunbed address and all kinds of people whose and cup levels are much much higher and you would be basically move subtracting from the pool of benefits that would be available to the. now we have to take a very very quick break but more when we return with dr james gulliver that in today's big deal i did harrison and i take on the matter of reckless of government spending and truly you will not believe or some of your taxpayer dollars they're

going through a truly you won't believe it kind of disgusting but as we head to a quick break here's a look at some of today's close enough or figure out. we

welcome aaron eight and abby martin to have the two or three kosher on the our team network. is going to give you the numbers one to give you one star never i'll give you the information you make the decision don't worry about it i'll bring you the. revolution of the mind it's a revolution of ideas and consciousness force through with the system the extreme right you're probably would be described as angry i think i'm a strong no wonder single.

talking about the same story doesn't make it news. no pop cases question take. a look it was terrible a little very hard to make i. want to get. a lot out never had sex with her right there lol. lol. lol. lol.

lol. lol it looks. like. a. bit of a. welcome back we now continue our conversation with university of texas professor dr james gall britt i asked dr goldberg that whether governments can be rendered in voluntarily insolvent. in their own currencies the risk that a government can run is that the rest of the world may not wish to hold their currency or their own nationals medo wish to hold it in which case you'll see depreciation and that means goods that report become more expensive that you run the experience that is inflation in the domestic economy so that's that's a risk that's

a risk which is much more serious for small countries which are vulnerable to being hit by runs by private investors that it is to a large country like the united states or britain or germany where fundamentally the players in the economy are going to continue to use the national currency and are going to continue to hold their wealth in assets denominated in that currency and so the stability of those currencies that may go up and down some but there it's not deeply at risk from a widespread financial panic now in greece society broke down under austerity and eventually government debt that was restructured is this something that the u.s. and the u.k. should hear. the restructuring of the greek debt was absolutely essential. they added and indeed an adequate to the purpose of. providing some stability restoring some growth and to the greek economy of is there any risk that the united

states would have to do such a similar restructuring it actually impose a and or an involuntary haircut on the holders of united states treasury bonds no risk of that at all simply no reason to expect it could ever happen and the reason is that the greek government could not pay the interest principal repayments that were due on debts that were owed in the euro currency that the greek government actually has to earn via taxation before. pay that interest the us gov. it simply owes its interest in a currency that is the dollar which it is you as we've said is a fee that currency that the u.s. government itself controls so that all the congress has to do with the congress has done it always will do is order the treasury department to continue paying the interest of the treasury department which the checks there is therefore no risk that you're going to suffer a capital loss measured in dollars from this very now is there

a long term budget constraint first saw evern currency issuers basically how long can a sovereign government deficit spend before people leave space in the currency and force to fall. and in a large country there is no way that they are. that is this that the public can force the government to default all the public could do with it is move its assets to a other unit that again leads to a depreciation so default is not a threat which is on the table for a large. solvent currency issuers how long does it take before people lose faith in any significant numbers. in a country like the united states i think the answer to that is a very long time the united states can and has run budget deficits for its

entire history with half a dozen very short term exceptions it will continue to run a budget deficit for the rest of its history. the budget deficit. at present levels is actually not increasing the ratio of debt to g.d.p. that is stable right ratio stable is probably declining now so in the current school stance of the united states government there are. no risk to no no reason to believe that the private investors are going to be leaving the dollar for other currencies for any reason they haven't done so yet there's you know there's no cause on the horizon and see no reason to do it. that was james galbraith economic professor at the university of texas texas at austin it's time now for today's big deal.

as always i'm joined by my doppelganger no not really even one of our own we had a harrison my favorite who is going to help me talk today. about government misuse mismanagement and abuse of funds so let's get right to it now it's fair to say that no one particularly likes over use of government funds and for those who can understand and tolerate the occasional spending inefficiencies even they know that there must be a line drawn somewhere somewhere anywhere now the federal government is well aware of how wasteful it is and this is why each and every agency has an inspector general whose sole job his only job his or her only job is to investigate and identify government waste within the body that is supposed to investigate and identify waste well anyway we hear it groomed us we decided to investigate some of

the more so don't need examples of government waste waste that ends up costing the government piece of you the taxpayer tens of billions of dollars a year now here are some of the worst offenses check these out now for certain office number five the employment and training administration failed to track down one hundred forty million dollars an overpaid government checks due to calculation errors just calculation errors you know like when you put in a calculator that seems like a silly mistake and now the army on the other hand they wasted almost three hundred forty million dollars maintaining the stryker vehicle contract this is despite having to rebuild over a thousand one thousand of those eight wheeled armored vehicles due to wear and tear so clearly they were built world first time world we're talking with. no reason that we're only going to be the robot will get to be zero don't you worry now the department of health and human services they could have saved two point seven b. billion. billion if they simply took the time to look at how much medicaid and

medicare should have been paying for wholesale prescription drugs oh and let's not forget afghanistan boy oh boy where government watchdogs found almost two billion dollars in potential waste fraud and abuse now this includes the thirty four million dollar military facility built just last year that will be. he used and vacant building forty four million with nothing and finally and the most egregious and kind of embarrassing sent television however going to do it peanuts pops straight. from two thousand and six to two thousand and seven pissed because the us government one hundred seventy two million dollars for actually no be there one hundred seventy million dollars that's twice as much as the consumer would have paid a retail value now add now to me i need a loan for an inspector general is it mission that these bodies are set up to govern stink of government you know well you know i have to say we're going to

we're never going back never. again and i'm glad that wasn't a behavior rather than you know goes back to from my perspective to what james gall with was talking about in terms of the predator state it was interesting one of his questions that you asked him you asked him about isn't the. we've all these people who are trying to get their hands in on government money from the private sector isn't that going to mean very any time we spend money there's going to be ways he senses yes but you know we need to be able to come up with ways to spend that money in the most efficient efficacious way and that's part of the political process that was in right now that was actually a pretty good answer well it's obviously a good answer but the question is clearly today as we see it penis pumps are taking one hundred seventy million and that's not working today no no not at all and you know the interesting bit about this illegal and a little bit of detail about the whole thing of medical device maker because this

is a big deal here in d.c. with the government shutdown and part of the what people want to do was to repeal the stats from obamacare that started in january on medical device makers now the medical device makers have their old lobbyist here in d.c. and part of obamacare was to say that you know we get. all these uninsured people they're now going to be using health care and therefore this is a windfall to the health care industry so we're going to tax them we actually you know bring some of that money back a part of that money is going to be on medical device makers. who are making these he has paul you had an idea that wasn't so basic. the whole nexus here of government spending. a lot of the corporatism whatever you want to call plain part and that's how the sausage gets made in the decision to shut down of government so i mean it's

a very messy process and especially when you have special interests involved in everything that you do this is what's going to happen and know if this really kind of leads me to my next thought and if the size of these numbers let's talk about that now have historically we ever seen you know waste on this grander scale you know my blood take is that we have seen on this grand scale in the sense that. as a percentage of g.d.p. you can't necessarily say that there's more government waste now than there was before if you recall back in the eighty's we were talking about you know five hundred dollars toilet seats and screws you know that cost one hundred dollars so you know the scale of that we're talking about is in terms of the actual amount of government spending the scale of g.d.p. the fact that we're bigger country that government is a bigger part of our society so as a result all of these things are going to be larger but is that just a different metric on which that we're on which we're calculating these things it

seems like the same thing just the bigger the country gets the more it's going to grow the more the g.d.p. is going to grow the more government is going to grow and the more the more spending on things that don't need to be spent money on it's going to it's going to increase is that not just the case you know it is that stuff with the kids and i think that it's a big problem in terms of how people think about the whole concept. economics economics isn't just. people in economics want to tell you that this is the and therefore you know we can use all these equations to come up with answers but the reality is at the end of the day you have to make policy decisions based on this economics and that is a political issue and a theoretical lot of thought as always you rock that's all for now but you can see all segments featured in today's show on you tube and you tube dot com slash boom bust our teeth we also love hearing from you so please check out our facebook page send us messages say hi whatever that's facebook dot com slash boom bust our team you can also tweet us at aaron eight and at edward and a.j. and it's from all of us here at rambus thank you for watching we'll see you next

time check out. a still in oregon is suing nike for one hundred million dollars claiming that the company failed to include a warning on its air jordan stickers that they could be used as dangerous weapons after he used his own pair to be. another pimp this from the pacific northwest to bill gates continues to pimp out your privacy and data to the n.s.a. and many other forgot to spy agency want to give a few bucks but rather the news sneaker this pimp the boys his company software products including skype as a dangerous weapon against the constitutional rights of unsuspecting customers on the products. again so himself when he gets caught.

i've got a quote for you. it's pretty tough. they would stop story. if this guy like me or that guy started working for the people most issues on the beach were richer bridegrooms didn't. they did rather. wealthy british style. that's not tied to the title. market why not. come to. find out what's really happening to the global economy

with much stronger for a no holds barred look at the global financial headlines tune in to conjure reports . coming up on our see another u.s. drone attack on yemeni soil and another potential mistake that's comes all some members of congress disagree with president obama over whether the pentagon or the cia should control the u.s. drone program that story right ahead and a two p.p. trade deal could benefit hollywood internet activists worried that the pack will put too much power in the hands of the entertainment industry we'll tell you more coming up. and it's been one week since the chemical spill and west virginia's elk river officials have told residents it's all right to drink the water from last year pragyan it will have an update on the week later in the south.