underway now the former banking exacts all face charges relating to a loan scheme which attempted to prop up the anglo irish bank during the two thousand and eight financial crisis sean fitzpatrick and william mcateer faced sixteen charges of unlawfully providing financial assistance for the purpose of buying shares in the anglo irish bank now sean quinn a star witness in the trial was at one time the richest man in all of ireland he borrowed billions from the bank to fund a global portfolio the celtic tiger boom years however when property prices collapsed across the world when billions had to file for bankruptcy now the anglo irish bank was ultimately bailed out costing the irish taxpayer and european union tens of billions of euros now the case marks a rare criminal prosecution of banking officials involved in the two thousand a credit crisis and with hundreds of witnesses millions of documents and a trio of nationally hated figures the trial is proving to be one of the most

complex and controversial in the history of european financial crimes but here's the thing at least ireland is attempting to bring justice to those wrong during the financial collapse and here in the us home of the so-called masters of the free world nothing not one banking executive has been brought to trial sure there have been some fines a couple senate hearings the impression that some form of action is taking place but no real action nothing is taking place in fact jamie dimon he just took on twenty million dollars for a job well done this year at j.p. morgan my new same year that he raised had to pay billions tens of billions of dollars to the justice department of justice will let you decide. author and investment banker chris whelan has been critical of the u.s. his response to the housing crisis now while the housing bubble was ongoing he was

uncomfortable with the money and debt used to build the american dream but now that we're in a tepid recovery chris believes the big problem keeping us from a more robust recovery is household debt specifically the debt from residential mortgages he wrote all about this in his book titled inflated now i'm keen to hear chris's views on housing mortgages jobs and all the rest of the stuff chris welcome to boom bust it's so good to have you here now i want to start off by asking you do you know i've just spent the past a few minutes talking about how the irish bank executives they're being held accountable for their actions during the housing bubble now in the u.s. the f.b.i. warned of an epidemic an epidemic of fraud in the housing market but as far back that was two thousand and four that's when they started warning about it and nothing's happened and in ireland it's occurred just this past week u.s. nothing the question is do you think any american banking executives are going to be held accountable for what they've done during the financial crisis well no i

mean timothy geithner the former treasury secretary and larry summers and others basically said that you can't prosecute the heads of the big banks because it would be damaging to confidence they are afraid of systemic risk and all the southern nonsensical concepts so i would doubt it also so much time has gone by and you've had some other changes in the regulatory world that it would be difficult to prosecute officers and directors of these banks and let's not forget citi group bob rubin whole cast of characters from the new york business. presided over the world to believe the collapse of that bank and nothing was done so i wouldn't hold your breath. i certainly won't pay now since the crisis began big american banks that paid tens of billions of dollars in fines for wrongdoing however no one not a single person has been convicted with the exception of one junior trader at

goldman that french guy but what do you think about the shareholders being the only ones who have to pony up for fraud committed by bank employees well it's the shareholders of the banks and also don't forget the bond holders of private mortgage securities are the ones who foot the bill for these settlements that are enriching the politicians who have all of these attorneys general a.g. stands for aspiring governor don't forget and they levy for funds on these banks for a variety of wrongdoing and build their work here in california today and kemal the terrorists who put a consumer or a homeowners bill of rights in place carried off the lion's share of the settlement which she's allowed to distribute is she sees fit so there's a lot of politics involved here in the end it's not just a bankers who are the evil doers it's to politicians as well right it's who's worse it's hard to tell now i want to get right to the housing market. and i'm sorry if

you know exactly and it will hurt along i want to talk about our housing market stuff this is your specialty and chris you've been critical of how policymakers have dealt with underwater mortgages and you've written that congress needs to take a lesson from the great depression and start to aggressively restructure millions of underwater mortgages how do you propose they go about doing that though. well the banking industry back in two thousand and five when they made changes to the bankruptcy laws for a federal judges from restructuring mortgages you know today in the u.s. you still have somewhere between twenty and thirty percent of all homes that have mortgages underwater in other words a house is worth less than the debt so not only can these people not move not go get jobs in new parts of the country but in many cases they're not paying the mortgage anymore so you have this kind of dead weight in many markets nevada florida. michigan a lot of these states still have very high percentage of the homes that can't trade

now what this is done strangely is that makes prices go up here in california for example you've had a huge run up in prices in places like san francisco down here in the south in orange county in part because a good bit of the inventory can be sold so you have a limited supply you have people want to buy homes that actually pushes the house prices up more ironically right ironically it's a very strange situation and i think it's actually a drag on the u.s. economy now late like you mentioned the housing prices they're on the rise and fact that's the fastest pace of rise since two thousand and six but underneath the surface all of those underwater and defaulted mortgages they do matter i'm asking you know can you explain to viewers what's going on with foreclosed and bank owned sales versus the rest of the market. well if you think of the northeastern states are states where you typically need a judge to bang the gavel before the bank can take possession of the house you're

talking about years between the point of default and when the creditor gets her hands on the home and they can resolve it so in states like california the southwest they've pretty much gone through the human torrie of homes that needed to be resolved in the ne no we're still basically frozen in place again in part because of consumer protection laws the politicians put in place laws that make it difficult to foreclose and it actually hurts homeowners generally because they can't sell their house and the people who do want to sell have a market or the volumes of have fallen dramatically you know what we have here is a case where and this goes to ireland it goes to the e.u. in general not just for housing where the politicians don't want to restructure bad debt they'd rather print money and try and inflate their way out of the problem and it's not working so here in the u.s. of fed's kept rates very low they've been trying to essentially deal with the problem through inflation and they can't make inflation go up in fact

a failing it's been going down in this one respect so you know we have a problem that everyone wants to ignore but what you've got to remember is that in the one nine hundred twenty s. when the housing bust started in one nine hundred twenty seven it went for about three or four decades before you soaked up the excess inventory in states like florida and the southwest even in those days so we're really playing that movie you could see florida struggling in terms of home prices for years because nobody wants to deal with it particularly the northern part of the state that's not as attractive meanwhile down in the south miami that area you have arjen times italian right half a latin america move in there it's capital flight so it's a very interesting story and as with all things in real estate it's a local story or a market is different particularly florida florida is just always aware and one to me about. and but you're coming to you know argentina is that it's all going there it has to die because somewhere but as well as well as for a lot of other latin american countries now chris your company carrington it's

a soup to nuts residential housing company you cover investments. me origination asset management service and rentals all of it your name it so you have a really good read on the market now there's been a huge influx of investor capital into the market especially in distressed regions like you mentioned phoenix big a successor and now here's the question are the professional investors the cash buyers buoy in the market in a way that's bidding up prices for everyone else. well they certainly have an advantage in the sense that they have cash and they don't have to qualify for a mortgage also it's very difficult for consumers to get a mortgage today you need a very very high credit score to get a mortgage from a bank not so much with a non bank like carrington and you know the other thing keep in mind is that home prices generally probably peaked at the end of the second quarter of last year even though certain hot markets are still pulling up the indices that everybody watches

in the media if you really look at home prices at the local level markets like massachusetts new jersey they've all stopped going up so what you have of now is said if you look at the case shiller index the latest press release from s. and p. what it tells you is that there's five markets pulling the average up remember it's an average but generally speaking in the rest of the country you've seen a pretty marked deceleration in home price appreciation over the last six months so my guess is that the investors who got in in the last year year and a half are a little bit late we stopped putting investors into rental homes two years ago and fact most of those have been sold so you know our view carrington is that rent is pretty much done as far as that are you know trade you were talking about before were the biggest buyer non-performing loans in the country and we like that business because we go and we fix some in many cases we keep the family in the house. it's a very good business but to just go out and buy homes in the open market today i

don't think that's a really good investment strategy because i think home prices will be flat for the next couple years chris thirty second fact i want to ask a question do you see any local markets becoming bubble. well it's a bubble in a sense that you have limited supply and the buyers whether they're investors or home owners or bidding up houses that are available to trade so you could call it a bubble but it's not a credit induced bubble in the old sense because the fed has stopped but able to get credit to grow in fact banks if anything you're underutilized right now they're not making loans it's fascinating you know the top six banks are out of the wholesale market completely so for a consumer to get a loan today it's very hard it's very hard and i know what you really put a cherry on my weekend ahead kind is that it's always better to be informed chris thank you so much for being on the show that was author and investment banker chris whalen. coming up we're looking at the best of the best from this past week between

jim rogers and sam and we've assembled some seriously quotable quips you definitely won't want to miss this plus that harrison and i are tackling your viewer feedback in today's in the margins because of some pretty insightful stuff this week way to go and we're pumped to discuss it on air but as we head to a quick break here's a look at some of today's closing numbers of the bell stick around. the region. was really do he says told to lean on the signs because it is a market economy and still total budget of the european union what we're talking

about is not more than one percent of the cheated to go to doing it the total budget is about the size of the budget bill and if this is called a socialist concept then look at the size of welfare states on the national. this is totally ridiculous what's ridiculous about it they. are so ridiculous about the e.u. marching in more or less to greece and to cyprus. socialist. to talk about the raiding people's private bank accounts to support the european union and this is what they're talking about people are falling over themselves immigrants are falling over themselves to get into great britain because they know the rest of europe is. a very good intelligence unit to u.k.'s. whole range of different opportunities to information they get it from the media.

people can give them information to get trained of information across borders is actually quite complicated what we do is in e.g. intelligence function to use a little range of sort of independent information we have those relationships for example with interpol helps us find out where that is junk trafficking going on.

little dancing happy friday now this past week we had some great great guests on the show jim rogers said some pretty remarkable stuff parts of which weren't even aired in our original broadcast plus sam and tara and francine mckenna said some things about the financial accounting world that you're definitely going to find interesting take a look at your opinion which i'm urging market share the most promise for investors right now. the best of places like me and mara north korea chido some some parts of the chinese economy they have said that they're going to give incentives and spend a lot of money on some parts of their economy you should too russia russia is in good shape i mean this is astonishing to me russia doesn't have exchange controls russia has huge international reserves vast natural resources totally disliked by

everybody i mean russia's i'm sorry to put money in russia. very sure russia for forty six years even i even i am putting money in russian though now i've got to ask you did you say north korea and there i did say if i could put all of my money into north korea would know it's illegal for america so i put any money in the north korea but no north korea's of the north korea today is where china was in one thousand nine hundred ninety eight one differently exciting place where me and more was in two thousand and ten two thousand and eleven just beginning to open up and change now jim we spoke with george magnus last week this kind of a non sequitur but he told us the emerging markets crisis that it has only just begun and i want to play you a clip from that interview so here it is. 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 every crisis needs. a lawyer. now jim do you agree with george that an emerging market crisis is only just beginning. the problems in the emerging market and first with a lot of emerging markets some better than others but there are some serious serious problems out there and they are going to get worse turkey indonesia india this is not over yet brazil plenty of them that have serious serious problems and it's not they're not being resolved part of the problem of course the major problem is the federal reserve in america has interest rates at such a time in the low level that people can borrow lots of money and that america is printing a lot of money so there's plenty of money and they quit a lot of money to be borrowed and so a lot of countries have borrowed the money which cover it's cheap rates which covers up their problems they haven't address their problems and so now now we've got a huge problem facing us and it's going to get worse this is not over yet you should

be worried and be careful and be prepared now i want to ask you about trade agreements and there's a lot of talk lately about the trans-pacific partnership here in america one what's your view on it and what t.p. the deal be good for growth. well open markets and free trade is good for everybody it makes everybody have a higher standard of living yes some people suffer as they get dislocated but overall in america the three hundred twenty five million americans were all better off some people some people be much better oh so i'm less better off but overall we're better off so keep free trade and t p p assuming the conditions are more equitable and are both will be wonderful for everybody there's no question that opening markets is great do you want to go back and buy expensive tv's again of course you don't you want to go back and buy expensive cellphones again of course you go you want to buy cheap of fish and cellphones and products and that's what

you get when there's open markets and free trade sam what do you think of companies like herbalife an amway and even avon whose entire business model is based soley on multi-level marketing if i within my retirement from crime started multi-level marketing company put twelve lead based in utah because china doesn't want to. really so i feel as though that says a lot given that you who are a self-proclaimed former white collar crime or convicted white collar criminal. is multi-tiered marketing a fraud. it's a quasar lies scheme to defraud people out of their money basically it's a business of selling hope most of these people that are recruited don't make any money and even the ones that do make money if you factor in the time that they put into it it's below minimum wage you get a better living flipping hamburgers at mcdonald's. ok well here is someone who

would agree with your activist investor bill ackman he's been extremely vocal about herbalife being a pyramid scheme and his fund pershing square capital it's so sure of it that he's taken a one hundred billion dollars short position in the company now the question is why would such a sophisticated investor be so vocal about a potential pyramid scheme if they weren't absolutely positively certain that it was in fact a pyramid scheme well i believe that i believe that it's a pyramid scheme i don't think that herbalife is going to sue acme because then they'd be open up to discovery that would give documents subpoena power and you know you don't want to pissed off short so we go in through your books and records now here's the question you know price waterhouse cooper they've come in and they've looked at the books they're new auditors and they've given them a clean bill of health and herbalife they certainly have plenty of cash cash flow to fund why would you have various ways that the price i'm sorry to interrupt your price waterhouse coopers looking at the books is kind of like k p m g looking at crazy of these books when we were as a criminal i used to brag about what it did financial reports it's

a nonevent in fact the big four accounting firms they feel between twenty five and forty nine percent of what it's inspected by the p.c.'s will be nonevent the accounting industry was complicit in the failures that created the financial crisis which obviously began in two thousand and seven. certainly that'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 at advance. auditors are right there in the middle and they work both sides of the equation so for example peter b c is the other of j.p. morgan which was the major banker to an a global and have 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 pete obviously is the auditor 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 the lawyers 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. and a global peter b. a c. was fully aware of weaknesses in their systems and weaknesses in their ability to control the transactions that of course i 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. there and peter you see never raised any kind of concern about the weak internal controls or that we corporate governance course i 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. there you have it some awesome stuff from this past week the best of the best from boom bust time now for in the margins. it's in the margins but the one v. only mr edward harrison now every friday ed harris and i put you the viewer into the driver's seat letting you steer the show with your comments questions and concerns all sent in via social media twitter you tube facebook you know all that stuff now let's get right to it our first comment comes from stevenson he writes. here it is free trade is good without social dumping you may pay less for your t.v. or cell phone but you definitely lose

a lot of jobs it is and it is fair to ask which bargain is better in france before the huge industrialization of china things cost more but at least there wasn't structural unemployment as we see today i mean we were doing just fine but some economists said it said to us it could get better now we see if we had to ask the people to choose between paying less for concerts for consuming or lose their jobs what would they choose there is no coming back don't don't don't and the question is. free trade friend or foe well you know that's the common i was going to free trade is if you think of it in its real form but what we really have is men it's true there's a big difference between free trade and managed trade and there are all sorts of little provisions that are slipped into this thing about nafta for instance in terms of the huge agricultural subsidies that we have so basically you know we're subsidizing the farm bills getting passed now hundred billion dollars bill ten

billion of subsidies go into commodities and those are then shipped out to mexico you know obviously you have a huge price advantage if you're a massive agricultural company in the united states and that's going to destroy businesses and jobs in mexico so that's not free trade and that's what you get with these did such a misleading you know free trade agreement such a misleading title when i got to another question of this comment it comes from and why it's a bunch of numbers he writes. money is a belief system there is no value in money the value comes from the belief that it will help you acquire goods and services the ultimate financial solution is to say screw it and not use money admission should we say screw it do you think that money system is good or bad or do you say well my view is that money is not a good system the money system that we're working with is not in fact it's destabilizing everything that we're looking has happened in terms of crisis and so

forth has been since we've gone into feed the bretton woods system was much more stable there were no major financial crises during the bretton woods system which lasted for over thirty years since bretton woods system has come into play with crises in seventy four seventy eight eighty we've had a crisis in eighty four eighty seven on and on so every three or four years is a crisis and the reason is the money system that we are relying on so is and why five nine nine zero totally off or does it make evolved. in any way shape or form i think the point that well i would say look at it this way really what the problem is is that we number one you how you can print unlimited amounts of money and number two is the dollars at the core you know people want to accumulate dollars and that means that you automatically have a current account deficit that's going to destabilize so you go now is that all always turns out that's all we have for now but you can see all segments featured in today's show on you tube and you tube dot com slash boom bust r.t.

we also love hearing from you so please check out our facebook page at facebook dot com slash a bust archie you can also tweet us at aaron ate at edward and it's from all of us here have been best thank you for watching have a great weekend c n x time. as

you know if you don't turn the corner. response to bruise. everyone in my life that i cared about they're gone and they. came to skin well. i was national champion in track and field and also i was able to go and qualify for the olympic games. you know nine hundred eighty eight i started to experiment with that the drugs i had lost all the financial means that i. was really on the street. black market can't. break. through.

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