hello there i am marinated and this is boom bust and these are some of the stories that we're tracking for you today. is my favorite day of the week here on boom bust it's tech thursday and a word talking facebook today now the social networking site is having a tremendous day and better yet a tremendous year we'll look into why and how coming right up then steve hanke is on the show now hank you sat down with me to talk about arjen tying debt and there's quite a bit of it and in today's big deal edward harris and i are covering the latest tech stories of this past week and we're looking into everything from microsoft to

amazon from wrist myers the latest acquisition you won't want to miss a moment and it all starts. with. our lead story today. now why have consistently and loudly voiced my opinion about facebook i'm not a fan today i'm giving them nothing but congratulatory praise thursday facebook stock skyrocketed as much as seven point six percent to an intraday high of almost seventy seven dollars giving the company a total market cap of one hundred ninety seven billion dollars that's equivalent to the combined values of both u.b.s. and american express. not small now when measured by market cap facebook is now the

fourteenth most valuable company on the s. and p. five hundred and in order to suppose a market capitalization of two hundred billion dollars the stock would need to be at seventy seven dollars and ninety four cents trading at that number which you could very well do now facebook stock is up more than one hundred eighty percent over the past year and the social network has been lifted to new heights thanks to better than expected quarterly results improved user growth and mobile advertising about sixty two percent of facebook's ad revenue now comes from advertising on mobile devices which according to the marketers expected to eclipse newspapers magazines and radio in the u.s. for the very first time this year so bottom line facebook naysayers can out eat their words myself included because it's pretty clear that facebook has successfully transformed itself into a no bile advertising juggernaut and in reality facebook is probably even bigger

than we think the company actually has more than two point two billion active monthly users across its flagship properties including whatsapp instagram and messenger now the total facebook incorporated user base has roughly doubled in only one year's time so basically one in every three humans on the planet are on facebook but hold the door my dear friend and colleague edward harrison things facebook isn't all that in fact he believes that bubble is just my word not his so why does ed think it's bubble lissa's because it's a large market cap stock in fact it's the fourteenth most valuable stock in the s. and p. five hundred as i mentioned before and its value exceeds about two thirds of the top stocks on the dow jones industrial yet at the same time it has a price earnings multiple of nearly one hundred times which would mean it would have to have tremendous and i mean tremendous growth in order to justify that multiple and provide a decent i mean even kind of. isn't returned to investigate investors so to quote

ed basically facebook is like cisco circa one thousand nine hundred eighty nine. argentina is facing some serious debt problems and they have until the end of the month to figure it all out now this isn't the first time that this is happening argentina and fact argentina defaulted on the debt as recently as twelve years ago so why do people even keep buying argentine debt anyway to get a better handle on what's going on in argentina i sat down with dr steve hankie he's a professor of applied economics at the john hopkins university in baltimore and a senior fellow with the cato institute i first asked him if argentina even actually has the money to pay back its bondholders here's what he had to say. well it has the money to pay back the so called hold. that never agreed to

the swap. and which of the old bonds were swapped for new ones and there was a haircut of about sixty three percent on those and about ninety three percent of the people holding the old bonds greed to the swap so there were roughly seven per cent who did not. and there are. roughly shall we say fifteen billion dollars and argentina could pay the. so argentina could pay if they wanted to essentially yes it's a it's a matter of ability to pay is their willingness is not. and this is this is more or less always been the game in argentina. you know if you shake the flower bed there's usually a little flower left in the but again they have got some money and they're not

willing to give it up so that's that's been pretty much the history of argentina for a couple of hundred years been in default on bonds and their creditors about thirty five percent of the time so that's that's an incredible number actually. it's certainly it's almost it's a record for not a very good thing to hold the record for now when i ask you where is the argentine economy headed down the economic policies are have been a. complete disaster really since they gave up and started breaking the rules of convert ability so this would go back before the actual default on the bonds this would go back and in one thousand nine hundred nine they started breaking most of their own rules around the convert ability system that linked the peso to the dollar and then. eventually we've had many years now with kirshner's and power and it's been one.

irrational economic policy after the other so the economy's quiet vulnerable and i think if they don't default on the bonds economy of probably shrink by maybe a percent and a half or something this year if they default who knows that it could go down by two and a half percent three percent and in terms of a contraction which is a very severe. depression actually. no the default here is the result of a u.s. supreme court ruling on treating debt held by restructuring holdouts as equal to that held by people who participated in a restructuring years ago now you mention this briefly before but can you explain the reasoning here of the chords on the you know perry pass through debt clause that focusing on the parapets you part well that simply means that in short all of bondholders have to be treated equally so. the judge ruled and

was upheld on appeal the u.s. judge that is the u.s. courts that if any payments were made to those ninety three percent of the bond holders who in two thousand and five swapped their old for nude with a haircut so for if involved that payments would have to be made to the seven percent they would have to be made whole. and in order for the suit provision the whole. insured let me let me summarize here getting in the illegal we we don't want to do that if we can help but. treating all the bondholders equal with the interpretation of the u.s. courts is that payments made to the. ninety three percent

who agreed to the swap would trigger the requirement that the holder would have to be paid no and made and made whole. so do you think the u.s. supreme court decision sets a precedent that will make restructuring like argentina's more difficult. well no i had done i think it was all what will happen is you had a chaotic default in two thousand and one in argentina and that default led eventually to this agreement in two thousand and five for the debt swap and it's the chaotic part of the thing the origin tines were were ill advised and. in in the policy sphere they were quite irrational too so if they had bad legal advice. they were getting way out ahead of their skis too clever by half kind of a latino thing and they they didn't structure these bonds right in the provisions

or were poorly written and as a result of that that's why you have this potential for this huge trigger to go off if the holder paid their fifteen billion dollars then if that occurs on a voluntary basis before the end of two thousand and fourteen that means that that all of people who agreed to the swap they're made whole to do and then the bill runs a one hundred twenty billion or something like that very large number which which argentina. they don't have the liquidity is to pay it of course they have the assets if you look at the balance sheet of argentina they could liquidate and privatized a lot of assets and they probably could end up paying one hundred twenty billion over some period of time but. but that's again getting out in the weeds

and complicating things i mean they're really in a pickle now because of poor and nissho legal advice and a series of very imprudent political judgments on the part of argentina i mean that's the problem. steve i want to move on to ukraine now the u.s. is rocketed up sanctions on russia because of the ukraine crisis and many expect more to come so do you expect more and if so what impact will they have well. i do anticipate that there will be more sanctions i mean there's just a drumbeat. on capitol hill and a lesser degree in brussels but in general there is pressure to ramp up sanctions and the just how hard does by depend on the nature of the

sanctions i mean one thing the warmongers in the in the united states would like to close down the ability of the russian banks and financial system to to use u.s. dollar clearing facilities well that would be a crusher but for russia but it also i think would be extremely stupid and irrational for the united states to engage in that kind of thing because basically they're contaminating their own payment system by by saying oh no this isn't an open system where will decide the politicians that are so popular on capitol hill will decide who's going to be able to enter the club and on what terms they will be allowed to enter the club. that was dr steve hanke a professor of applied economics at john hopkins university. time now for

a very quick break but stick around because when return of coral done a girl is on the program now carl sat down with me to talk about tech where were balls and security concerns and not space and then in today's big deal edward harrison and i are talking all things technology and remember you can see all segments featured in today's show on you tube at youtube dot com plus boom bust our t.v. and on hulu and who dot com slash boom. now before we go to break here are a look at some there but the numbers the bell on that. little girl. joining us this moment impossible as we pulled the international team despite the recent glory of. one home so much we've been to mysteriously was

difficult to see underscoring the way the park cleared the road for the group but. on a larger we've done the future. no c n n the m.s.m. b c news have taken some slight risk but the fact is i admire their commitment to cover all sides of the story just in case one of them happens to be accurate. that was funny but it's closer to the truth and might think. i'm

ok it's because when full attention in the mainstream media works side by side the joke is actually on you're good. at our team news we have a different approach. because the news of the world just is not this funny i'm not laughing dammit i'm not happy. with. you guys to the jokes i will hand over the stuff that i've got to. welcome back to the show the next wave of technology seems to be wearables with the mobile phone market reaching saturation companies like google with its recent announcement of the android where are hoping that this new frontier will be the

next area of growth however with various privacy and data concerns wearables might just be another way for consumers to expose themselves i spoke with blogger and author coral dennett girl about what worries him in this new sector and i asked him about privacy issues in wearable technology and light about bull's eye o.-s. security concerns here's what he had to say. let me huge problem with wearables on the whole internet of things concept in general and that is do we don't have some kind of reasonable assurance on security i don't want these things anywhere near me . and i'm one of the early adopters if you will when it comes to things like going home automation building my own systems to control my house and the lighting heating air conditioning the pools things like this but the idea that you can have built in by manufacturers these sorts of back doors. is really a problem you don't think about the person is walking around with some kind of

a fitness tracking device on the wrist all day long that's monitoring your blood pressure and there are you know their heart rate things like this that data is incredibly valuable to people who want to use it and you know you say well you know who would really care about that well your health insurance company might care. they also might be very interested in the g.p.s. track from your phone did to the shows you going past and into liquor stores for example there's a thousand uses for this kind of data and it's one thing to grant access to involuntarily it's quite another to have it taken from you without your knowledge or consent now called the u.s. economy shrank at a pace of two point nine percent in q one and i've asked a lot of our guest about this because it's a shockingly large number for an expansion what do you think is going on in the u.s. in the u.s. economy. well i don't believe a lot of the numbers that i see so there is this seasonal adjustment factors

that get put into some of the government reports are utterly comical so i tend to work off the unadjusted numbers because a lot harder fudged them although even there you have to wonder where the data collection is any good. i frankly was not terribly surprised to see that kind of a contraction but it does mean that the money printing games that have gone on into credit pumping that has happened within both the u.s. congress and the federal reserve and let's not get this backwards either the fed is the puppet of the government not the other way around. what this is shown is that these policies have an end point where they stop working and we've reached that so now you know people say well the fed is really is reducing their or their bond buying their tapering it's going to go away in october and they're doing this because the economy's doing better the truth is they're doing this because the bond laddering systems that are in place and all of the various pension and other funds

are reaching a point where the pain exceeds their ability to tolerate it and so it has to stop but at the same time without credit expansion as we've had over the last thirty years you're going to see the truth of what our economic activity has really been over that period of time is not positive at all so what do you see in retail sales given your view on the economy. well he tail sales again are driven to a large degree by credit expansion so what you're seeing now is that as that terminates that cycle terminates the ability to drive retail sales expansion also terminates and so we are seeing a slowdown in any area in and i think that's going to continue i don't believe any once you know anyone credible thinks that we can really gets request percent g.d.p. growth rates on a five year rolling basis over the next five years and you know most of the economic projections are being made in the forward views within the stock market in

other marketplaces are being based upon disk promise i think this is just absolute nonsense so the fed seems to be more worried about the economy than it had been it lets on but after all it's still in plain quantities and that's important to remember and the fed funds rate is effectively zero right now so do you think it makes sense for the fed to ease given the state of the economy. no the fed needs to pull the quiddity out of the system it needs to cut this game out stop the bond buying in essentially allow the rates to go where they do the problem you have is that the fed isn't really the driver of this you have to remember that the federal reserve white shirt can only buy and sell things that are government guaranteed that's the charter and that's the law so if the federal government was to run no deficit there would be no bonds for the for the federal reserve to buy when you look at it from the perspective of the top down the problem with monetary policy is coming from the federal government's not coming from the federal reserve we need to

stop spending money we don't have and that's the root cause of those sort of credit expansion cycle that we've seen over the last thirty years we're now to the point where it's not working anymore to goose apparent economic output and so you're going to get want two things either the government's going to stop this in which case we're going to have to pay for all of this expansion that wasn't real or they're going to keep trying to do it it which point somewhere will go from zero contribution to quit to negative contributions and then you end up and it does spiral where it's forced to end and the results are a tad catastrophic on the economy now risen guest on our show francis coppola made an interesting observation on twitter recently and she wrote quote regarding the income inequality debate it's very simple inequality between countries is falling inequality within countries is rising so do you think q he has enhanced inequality here in the us. yes but again we're looking at the wrong thing you have to remember

that when when you run a deficit at a as a government what you're doing is to krishi eating the purchasing power of every unit of currency that you have in circulation that's factually what's going on it's an arithmetic thing has nothing to do with what you want to call it so who does that hit first and the answer is it it's the poor in the middle class because they cannot lever up and used again playing that you've been able in order to try to stay ahead of it the very wealthy on the other hand can do those things now of course with this comes risk for everybody that manages to beat this game and become wealthier on paper at least there are several who would tempt it and find themselves with nothing when the crash comes we saw that during the housing boom and bust we saw it during the nasdaq boom and bust and we'll see it again this time there are an awful lot of people who are multi-millionaires reading billionaires on paper that in fact have nothing because all of it is manufactured by leverage and

when the margin calls com they're going to end up bankrupt it happen the last time it will happen again. that was author and blogger coral karl denninger time now for today's big deal. time with edward one you know me on my favorite day of the week tech there is to and today we're discussing a bunch of the latest tech stories the starboard end first a lot of news coming out of microsoft on wednesday their fiscal fourth quarter performance was released barely meeting the projections of analysts and that doesn't sound too bad but they also just announced massive layoffs so what's happening over microsoft give you the lowdown so basically microsoft. platform shift here will go into the mobile space and computers are last decades technology and microsoft is trying to fight another uphill battle to move into that space

which is now increasingly dominated by what you would which is right on early today and by android google system so they're firing a massive number of people even though they just took over nokia nokia employees going to take the brunt of this raid and they're going to try to turn around the ship i don't think they can do it i think that basically microsoft is going to live off their past laurels going to try to do more acquisitions but it's going to be a tough road they're going to like the idea of of this particular period speaking of which thank you for bringing that up i.b.m. and apple big deal coming out there now can we talk about that you know who will this deal really change anything for either company in your opinion i think it's you know it's not really that big a deal from my perspective i think you know this was about the bring your own device type of thing that people bring their own devices to companies and that's really a big problem but once you get ahead of that problem by saying look we have a solution to deal with the corporate environment but you know people are going to

buy consumers who are actually working call prison. i phones anyway it's not really going to add up much juice to phones and i think that the market saturated any was so i don't think it's that big a do ok now amazon officially launched its first mobile wallet application and over the course of this year we've seen major new products from amazon like fire phone and fire t.v. so edward tell me about this what's going on what does this mobile wallet what will it do why is agree to me. the mobile wallet as they introduce it is pretty much nothing so it's. i think it's the first pass for the. good in terms of iterations but i was completely underwhelmed of what they're able to do and it's not a big point it's not like a paper whatever but everyone knows that amazon is getting into the payment space they're good they're putting the marker down for that and i think that they will ramp aggressively into making this a soup to nuts type of

a platform not just for the user but also for companies as well now i want to run to yahoo now earlier this week yahoo announced its plans to buy florrie and app analytics service and it underscores president could possibly be the company's largest acquisition or c.e.o. marissa meyer so big question what is an app analytics service and why would yahoo basically it's a targeting advertising targeting service so yahoo has really fallen off the wagon here in terms of advertising they've sold out most of the rather ties into you to microsoft where they're trying to do is make it so that they can target ads better have a say to advertisers look stay with us or come to us because we have these analytics and we can definitely target your advertising better and therefore you should use us over other companies i think it's a very good acquisition for them so that's a positive even though she might break the bank to. make sudden record first off now on to bear what is that hoover i love of her by the way that there are. as uber

moves into asia they're facing different bad. including a possible ban in seoul and getting a handle on beijing's vaccine traffic problems i mean if they can get a handle on that the. sky's the limit so how does a launch overseas compares to its service here in the u.s. what do you think i think you know it's when you're an eighteen billion dollars company basically you go to launch everywhere and ultimately what we're going to see is that they're not to be the dominate markets as much as they want in other places to get the ban that you're talking about traffic problems in beijing we have all sorts of problems in europe and what we're going to see is that they're going to be able to ramp as aggressively as they want and as a result of the growth is going to slow and people will be disappointed we'll see whether the vcs get out before that i say this breaks my heart because i love it over and i know i'm rooting for them to succeed but you said that lift and hello can can service all my needs as well have you heard yeah my son had just like the

out on one for the river on the highway although that's all the time we have for now thank you add as always but please check out our facebook page facebook dot com slash combust r t and please tweet out us at aaron aid at edward and each of us here bimbo thank you for watching and we'll see you next time.

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of palestinians in the west bank vent their anger at israel in the largest protest against the ongoing garza offensive which is killed more than eight hundred people . an eyewitness says a british journalist working for r.t. was beaten and tortured by ukrainian soldiers amid growing calls for his release and political deadlock made an ailing economy ukraine's ruling coalition collapses and the prime minister resigns as the bloody internal conflict continues to drain the country's budget.