head over there i marinate it this is boom bust and these are the stories that we're tracking for you today. coming out we look to the future today and say goodbye to the past i'm talking to you ben bernanke then a friend same kind of talks auditors accounting and accountability or lack thereof you want to miss my interview with her from earlier in this week and then finally we reluctantly let you sound off on today's show after a week of twisted comments and harrison was kind enough to source just to watch the post live television we do keep it clean well dressed i'm on today show now let's get to it.

let's begin with a moment of silence for our departing federal reserve chairman mr ben bernanke. ok moving right along that's it done now let's look to the future for several years we've had technology available to us that allows one to pay for goods and services with smartphones no wallets necessary at all now my cell phone today i have both the square out and the google wallet out downloaded and i want to make this very very clear i am not i repeat not a first generation adopter of new technology and never have been and i probably never ever will be i still like re my books on paper and i'm not interested in going to outer space and bullshit but that said i do love the idea of potentially never ever ever having to deal with my bank ever again i'm pretty good now this has

been a dramatic week in the developing world of virtual payments out here in new york city on tuesday called the new. top financial regulator benjamin lawsky bitcoin advocates discussed what they view as the advantages of currencies and over our current worldwide money system what those advantages could and can be now during the hearing even mr lawsky complain that it takes his bank three days to transfer money to pay a credit card bill at that very same bank but when last we asked about what efforts that thanks have made to create their own big client alternatives many pointed out that big banks have been trying to play down the potential virtual currencies now j.p. morgan's chief executive jamie dimon himself said that its point is quote a terrible store of value and could be replicated over and over yes big fish and autos argue that digital money could provide a way to dispense with transaction fees and penalties charges by banks so of course mr diamond wouldn't be a fan banks want their fees they have no interest in embracing new he was forms of

payment and why what they it makes no sense for them but here's the thing why would we as consumers not want to embrace feel as payment systems even this gal who believes first generation anything should be viewed with scraps skepticism and a healthy dose of doubt things that new queen card thing looks pretty radical i want to get one so count me in on the side of this new deal this form of banking that awaits us i welcome it with open arms. when the technology bubble burst serious corporate malfeasance was uncovered everyone was shocked at the spectacle so executives at companies like enron and worldcom ended up behind bars and u.s. lawmakers got religion about fraud and passed the sarbanes oxley act of two thousand and two also known as the public company accounting reform investor protection act or just starbucks for short that's

a mouthful right there now starbucks was supposed to mean criminal prosecution for corporate executives who allowed their companies. to publish misleading financial statements but guess what in the wake of the worst financial crisis since the great depression sarbox has been a non event a repeat nonevent not one even one captain of industry or big big bank has even been prosecuted under the law now our next guest writer an independent blogger francine mckenna has problems with this she talked to me earlier in the week about accounting accounting firms and accounting statements i started our interview by asking her how a large institution like lehman brothers imploded without any of its auditors raising alarms check it out. really beyond me i'm still mystified and we still don't know why none of the auditors gave us the warning of possible problems at lehman brothers or any of the other banks in particular that failed or had to be forcibly nationalized store acquired during the crisis and your opinion was

accounting fraud a factor in lehman brothers downfall. absolutely. the problem with the discussions around lehman brothers was that they focused on whether or not the accounting for the repurchase contracts the repo transactions were technically ok for accounting purposes but they really didn't focus on and no one ended up prosecuting where the disclosure violations they just weren't disclosed to investors so no one has been prosecuted for of the lapses that lehman . none of the executives were prosecuted by the f.c.c. your department of justice ernst and young was sued ernst and young the auditor was sued and recently settled of private lawsuit for ninety nine million dollars the suit that the new york attorney general brought against ernst and young for fraud is still pending although we haven't heard anything in

a long time. now what about m.f. global that was the company led by former senator and governor john corazon governor of new jersey former governor he was once the c.e.o. of goldman sachs as well now it collapsed in a heap in two thousand and twelve or was anyone charged with fraud there funny you should mention that that's a chicago firm that rose from the ashes of rap cohen other bankruptcy that was my tried and no one has really been prosecuted for that either although there have been some charges laid by the c.f. to see the consumer financial protect the commodities. regulator and they're also have been several lawsuits although not one of them yet naming the the auditor peter b. c. at least not any major ones now do you think the accounting industry was complicit in the failures that created the financial crisis which obviously began in two

thousand and seven. certainly there it's sort of the promise of a lot of what i talk about both on my blog in other publications an out when i speak out of balance the auditors are right there in the middle and they work both sides of the equation so for example peter b c is the order of j.p. morgan which was the major banker to an of global global they couldn't be completely unaware of what was going on and of the transactions that might have caused problems same thing with ai g. and goldman sachs and the problems that they had with transactions and marking them correctly peter you see is the auditors of both a.i.g. and goldman sachs and all of the auditors play important roles you know auditing government agencies like the fed were deloitte is in charge like the treasury where k.p.n. g. is in charge and the tarp program which peter b. a c. and ernst and young got lucrative contracts after the crisis to try to help clean

up now can you give me a specific example of the types of transaction issues you're referring to. well let's look for example goldman's. enough global peter b. a c. was fully aware of weaknesses in their systems and weaknesses in their ability to control the transactions that corazon started doing he really pushed that company way beyond its core way beyond the kinds of things that it was really in business for but investing in sovereign debt and peter you see never raised any kind of concern about the weak internal controls or the we corporate governance corps and was trading on behalf of the company while also being chairman and c.e.o. and one supposed to be keeping an eye on everybody else now after the enron and world com scandals sarbanes oxley that was supposed to hold c.e.o.'s and c.f.o. as accountable why do you think we haven't seen more senior. or auditors of banks

get charged with accounting fraud in the wake of this finance. well as many have written the prosecutors believe that charging individuals with accounting fraud is really really really hard it's much easier to take a general viewpoint and the corporation and say well let's look at certain transactions and let's keep finding them finding them as we are seeing with j.p. morgan however individuals are the ones that run those organizations and the prosecutors are unwilling to make the cases for individual culpability they have to prove that somebody did something wrong and that they knew they were doing something wrong but they seem unwilling and unable to hold individuals accountable and take the consequences of perhaps pointing out people like jamie diamond or john core design or some of the other people that were in charge of bear stearns or lehman brothers were actually the kind of people with criminal intent to defraud

their customers and investors right. now in terms of fixes then how does dodd frank which is the crisis is signature regulatory legislation deal with these lapses by auditing firms. well certainly everyone else is complaining about frank in the business environment and that's a good sign that is might cause a little bit of trouble for them and maybe add a little bit of control but the auditors escaped any kind of mention frank there was one small area where perhaps they might have been. held accountable and that was the possibility of reintroducing third party liability for aiding and abetting frauds who are people like auditors and lawyers that were involved in supporting corporations. however that meant the specter amendment was completely squelched not by anyone in particular but by all of the legislators and general

again because of the very strong lobbying that the audit industry does and behalf of all of the firms and because there are serving both government and private industry now what kind of accounting changes would you personally recommend would mandatory audit or rotation work. well i'm not necessarily in favor of mandatory article rotation of all that might be the only way to shake things up and the reason is because we have four large firms that dominate the auditing landscape for large multinationals in both the u.s. and the u.k. and most of europe so really what you're doing is you're forcing me into a rotation of one potentially corruptible audit firm for another potentially corruptible are firm there are really the same and they all get into the same situation in terms of complacency and cozy relationships with their clients after

a very short amount of time the fees are too big for large companies over one hundred million dollars for example for j.p. morgan a.i.g. is probably the most expensive violent of all and peter you see has been the a.r.g. auditor since one thousand nine hundred eighty didn't even lose a during the crisis period when everything happened i think that the most important thing for our under. accountability is that we actually enforce the laws that are on the books sarbanes actually was a good set of laws but it hasn't been forced the only thing we've seen recently now certainly as they see is going after firm p.m.g. most recently for auditor independence violations and yet it's still far short of enforcing all of the violations that it found left one particular one out and that was one that i had highlighted a few years ago between g.e. for its tax staff i've been taishan service and. that was financial journalist and

blogger francine mckenna. coming up it's been an exciting week here on boom bust and we're bringing you all the highlights in this week's the best stuff you won't want to miss it then ed harris and i address the viewer feedback in today's in the margins but as we head to a quick break here's a look at some of today's closing numbers a bell stick around. for some. of the finish line of the marathon.

like. we welcome erin made in abby martin to have a terrific osho on the our team at work. it's going to give you the numbers but to give you one stock never i'll give you the information you make the decision only about how breaking the should work it's a revolution of the mind it's revolution of ideas and consciousness is frustrated with the system extremely your problems just would be described as angry i think in a strong. or single.

to the. very hard to take that. lightly and that is how to act with that you are right there are no.

such. on wednesday george magnus a former chief economist at u.b.s. told me an emerging market crisis has already begun we're in the process of it is what he said and as alarming as this may seem our guests over the past week have provided a hopeful message about what policymakers can do to end this and other circumstances to prevent a global crisis now first tom palli called attention right there there is called attention to the problem that being the financialization of our economy by driving out productive investment francis coppola told me however that when our economy and financial markets were in a freefall quantitative easing stabilize the global economy by putting a floor under plummeting asset prices but now she says the policy is only driving a wedge between the haves and the have nots as wages stagnate then guess larry

joyal suggested that we that one way to end too big to fail i suppose and thomas pelleas financialization worries would be to bring in more serious regulatory reform and weaken the power of the bank overlords take a look. on the surface the problems in argentina and turkey they don't seem to be related but people are calling the volatility in these markets and emerging markets crisis is it an emerging markets crisis. well i think it is ok because i think that every crisis needs bill has a lightning rod that basically acts as a kind of a conduit. for generic problems throughout the emerging or developing country universe so if you remember you know back in ninety ninety four we had to kill a crisis that at the time everybody thought was only about mexico in ninety ninety

seven a there was an asian crisis that in its early stages everybody thought it was only about thailand in two thousand and seven we had a kind of great financial crisis beginning and everybody said it was only about subprime so this crisis is only about argentina or it's only about turkey but i think this is just the manifestation of a you know the most obvious manifestation of an emerging markets problem and it's true as you pointed out that argentina and turkey and india and china brazil i mean they all have their own scripts they all have very very specific problems which are very peculiar to those particular countries that could be can all make financial political or a mix but actually in my view all of the emerging countries many of the big ones really including russia have reached a point in their economic development where the is a hiatus now there's a gap in terms of economic growth expectations and financial stability expectations

and i think this is in pots the jew to pos success the last twenty years have been so successful for the budget markets complex that actually new problems of now are risk about how to sustain. regressive that's really about changes of institutions of political change much more difficult than what happened twenty years of playing time spent by nationalization is well financialization is a situation in which the financial sector increasingly comes to dominate the economy so you see it in a number of ways you see more and more of the profits instead of going to industry and producers of goods and services and that gets redirected via the financial sector you see that instead of profits things get converted into debt and more of the payments to capital get paid back in the form of interest and you see it in terms of the control over corporations who begin to take on the goals of wall street so rather being long term players building

a product building huge industries of the future they're into short term profits and you see that then in terms of the way that c.e.o.'s are compensated with stock options and so on they've got it. the only thing they're interested is pumping up the share price rather than growing a company that's going to produce income and jobs long into the future so that our financial education really plays to distort capitalism and that's a very important point because people need to realize that there are different types of capital i'm not saying that q.e. isn't a bad policy it does prop up asset prices which when your asset prices are in freefall as they were after the financial crisis can be a good thing and they said we have here is a crisis as well but we also hat falling asset prices so that can be a good thing it does help to keep the economy afloat to reflate it when we've got risk of deflation quantitative easing does help with that. and it may be has helped with things like funding for large corporations that kind of thing my argument is

that it doesn't kind of reach the parts that it really needs to reach it doesn't reach what in america you call main streets it doesn't drive the economy and so we've had very rich the assets holders didn't quite well out of this at the same time. other people poor people suffering fools. say this has been hit by a lack of savings interest and savings those kind of things we've had a bit of if it's on hand and take it away with nothing really to fix the too big to fail model ultimately these banks need to be broken up wall street right now is is nothing more than an oligopoly in which you have a handful of you know incredibly large organizations that control the financial system. the implications of that are. too many to mention but they're not healthy for the economy for the very simple reason that the primary one is their ability to hoard information. and ultimately control prices if not

markets and ultimately collusion we've seen you know massive evidence of that so how do you go about breaking up these banks you can't just do it unilaterally it needs to be a couple step process initially i believe that they should ring fence certain activities. within their investment banking business is the biggest challenge there will be getting their hands around their derivatives exposure but once they do this you know ultimately they we need to reinstitute glass steagall and bring a meaningful sense of integrity back into the regulatory system. and so that consumer deposits are not at risk the way that they are currently. that was the best of our guests from this week now it's time for us to hear from you.

the margins time with ed harris and no one and only it's your turn to take front and center stage here on boom bust our friday feedback but you the viewer in the driver's seat and this week's comments come in response to thursday's interview with economist dr thomas howie our first comment comes from nico it's mind straights aggregate demand is an oversimplistic an incorrect way to look at economics for example country one spends one hundred billion on roads to nowhere obtaining plants such as tulips and pieces about the art country to spend one hundred billion on factories mines and building an industrial harbor according to keynesians these two economies are equal however country one is destroying wealth and country two is creating a present and future stream of wealth keynesians are idiots and why do you think about this our teens in. the distortion basically of understanding of what keynesian ism is all about was interesting because thomas polly i think that

he had a very good piece that we just saw and he was trying to represent what he thinks of as true keynesianism really would. interview was is that you have a financial is east of the economy which is a distortion of the very short term kind of thing which means basically. that investments are skewed away from productive investment towards more financial assets towards interest payments and it creates debt and this is exactly what we've seen over the last generation the last thirty years and so you know going to the users come and that's exactly what thomas. hollywood said he would say that those two scenarios are very different you want the first scenario and you don't want the second what thomas polly to say is that we have more of the the scenario the bad scenario that is the first in it was the better scenario yes

exactly that's the second now or next coming actually kind of leads into this and it comes from david nicholson nicholson writes one question what are we actually going to start pain down this debt we keep building up if any one of us just perpetually built up dead it wouldn't be long until we were filing for bankruptcy so how is it that the us is able to get away with it sooner or later we're going to have to start paying down that debt somehow or file for bankruptcy and keynesians would argue the exact opposite of this obviously. on some level but how do you respond. you know there are two parts you know there's private debt and then there is public debt when you talk about the few currencies system basically you're talking about money that the government is creating that is that you know essentially they can't go broke because they've created the money right they can always make more you can always make more of the model so. you know there's no there's no bankruptcy but the question is you know allocation of resources we can

get to that but you know with regard to the private sector there's always the problem that you know you can go bankrupt and what we've seen basically if you think about the way the economy is allocated most of the economy is the private sector where we have these destabilizing financial crises what basically happens is that debt within the private sector becomes too large and the debtors can't repay and therefore we have sort of a deal leveraging and it's because the private sector debt is can't pay that the public sector then steps in and therefore goes into deficit spending in order to ease the pain so to speak of that process but who allows this to happen or is it just a society is the whole takes on all of a step well it was interesting i was to. to pedal for you she made a comment that i thought was kind of interesting she said something about the united states unilaterally abrogating the bretton woods in one thousand seventy one and i said there was an interesting comment that you made it almost sounds like you

think that the current system as it's done right now is something wrong with the right and she said yes definitely there is something wrong with it you know basically we have a system created that creates credit ad infinitum and becomes very destabilizing when that credit grows out of control and then private sector agents have to you know they're not able to pay off that debt and then you get these these crises as people start to do love public is something wrong yeah exactly and thank you as always for your insight happy friday everyone that's all for now but you can see all segments featured in today's show on you tube at youtube dot com slash the best r t s i love hearing from you said please check out our facebook page facebook dot com slash been bust r.t. also tweet at us at aaron aid at edward and h. from all of us here at brandeis thanks for watching next time that i.

got a lot of housing problems but the government is not funding it and in a lot of the shelter today be having people brothers down the street because people begin to read didn't show to begin. right now running ironically i'm bored. move to the city of new moon. first there's a. little room. where you paid regular people like someone like a lawyer or doctor or so madison avenue it's boring and sometimes the homeless

people do little to look like brother but. this is such a close clergy that i'm still urging restraint were there should never be no in this city or region city in the world what people live a minute to do you lose you lose anybody could make you feel good you no good. look. at it in your book coming along the new policies you know. they should have you with us here on our t.v. today i'm sure.

coming up on our t.v.'s if you've been through an airport in canada you may have been spied on new awake document by edward snowden so that canadian intelligence used free airport wife lied to track passenger electronic activity even after they left the airport details of those revelations and a moment what does a big point to have in common with terrorists and edward snowden james clapper thinks they're all in national security threats after his testimony to the senate the national intelligence director is only for this guy but coin as the preferred currency of criminals that really the case i doubt coming up and then colorado food producers are being denied the option of labeling their foods as g.m.o. free.