a foreign exchange. and japan has launched another round in the back and forth with south korea over new restrictions on earth export materials used in semiconductors and smartphone displays japanese trade and industry minister here is shogi seiko said tokyo was quote not thinking at all of rolling back the restrictions on exports of 3 men their minerals sole after south korean president moon j. in war and in war new countermeasures if they were to affect korea's tech companies . go spoke about the situation during a news conference tuesday to kind of i think this is extremely dependent on the south koreans to sponsor naturally there is a possibility of the expansion of export controls are properly done situation they were last year there are 2 sides you. know existed. now i miss the organization ordinary unlike other usual giuliani so i can't help but think what problems there are. there is absolutely not a financial measure. do

i judge banks message to the world is that they are undergoing a restructuring a routine restructuring like the ones that have happened every quarter for the past few years in order to return the business to profitability in this current iteration davie is attempting to shed its equities investments its trading business and shift over to primarily a lending business now on the surface this move makes perfect sense but let's dig a little deeper remember when bear stearns underwent a restructuring translation they are in a full on crisis mode now the debts of lehman brothers and bear stearns were quick and painless but the coming the rise of deutsche bank has been long drawn out and very painful and recent times davey's investment banking division has been among the largest in the walls comparable to goldman j.p. morgan and they have led book writers and notable i.p.o.'s such as go daddy and aston martin and ali baba. and more but today with the stock trading at $7.00 per

share that is down 95 percent from its peak in 2007 the lowest it's ever been in its 150 year history the bee is in an irreversible death spiral and this restructuring is too little too late now this was an interesting quote from miles edwards yesterday. actually view it interest you look more like a bear stearns and a lehman because i like lehman i think is not in the fall it's not the end growth they still have some call ability. some really terrible decisions which are scaring off institutional and hedge funds themselves so now let's take a look at some of these bad decisions in october of 2015 davey and now it's a restructuring after being hit by a record fine for $2500000000.00 for the library scandal they then record a record loss of $6800000000.00 for 2015 and then the ex cel soran tells everybody that the company is rock solid in 2016 in march davy disclosed the notional value

of the derivatives on its books to be $54.00 trillion euros the baron bird bank then warned that d.v. is over 40 times leverage the federal reserve bank came out and said that t.v. failed the fed stress test 3 times in the last 5 years in 2018 i was involved in a money laundering scandal with a bank then in april of 2019 the german police raided d.b. over tax evasion charges mounting up to a 1000000000 euros and then also in the 1st quarter of 2019 d.b.s. hail mary attempt at a private bailout by commerce bank failed as merger talks collapsed now this collapse of deutsche has been predictable so it comes as no surprise to industry players its top shareholder airlines cut exposure from 10 percent and dump shares running for the exit the 7th largest hedge fund in the world and t.v.'s biggest prime brokerage client closed out counterpart exposure and also moved on so what scared them. well it could be massive direct exposure 43 trillion euros of as to

may derivatives on the books in 2008 derivatives played a big role in the financial crash in the form of collateralized debt obligations and betting on top of these financial assets people basically made bets on the market and people made bets on top of those bets and it turned what originally was a few $1000000000.00 of assets into a few trillion dollars and that's exactly what happened to georgia bank here bloom 40 trillion dollars off of only a few $1000000000.00 of assets there providing longs and shorts on both sides of the trade now that in it's of a self is fine banks actually do this all the time but the bad news is what are these underlying assets even if it's only an estimate $100000000000.00 worth of assets under this that's enough to drive clean it's market cap currently at $7.00 it's only $15000000000.00 then there will be an absolute need of a bailout in 2007 merrill lynch owned

a $7200000000.00 of safe c.e.o.'s but by the time the losses started mounting up they skyrocket to $32000000000.00 so basically just a few $1000000000.00 risky assets can lead to a huge don the effect so now what are these assets and what is davies exposure to them another big red flag is that in 20 reported a net income of only $267000000.00 euros now is the largest bank in germany and one of the largest in europe so with a scale of that size this figure is really low and really concerning added to the fact that it is currently operating in an economy where basically the entire central bank has kept interest rates near 0 or even negative basically pumping capital and buying up toxic assets has had a crutch and it still can't come up to profitability that is seriously concerning and it also points to the fact that there is something inside that we don't know about. that is draining the company who knows it could be the derivatives exposure

and basically it's only a matter of time before they are going to need the support from the e.c.b. . and with more details on this big financial fail we're glad to welcome back to our public citizens financial policy advocate welcome back to the show thanks for having me. christie gives some great context there and there's obviously been a long into mulch was journey i guess the question now is they've clearly sort of applied the turning kit arguably cut off a limb but is this enough to stop the financial bleeding is there more pain in the future it's unclear i think there's more pain in the future i think there are a number of things they need to do they need to raise capital that is the assets minus liabilities is what they've got in capital and continue to bleed that among other things by paying a dividend so terminate the dividend sell divisions this bank as all the mega banks are too big to manage start obeying the law that would be nice they paid $17000000000.00 in in penalties over the last dozen years and finally change the

compensation structure the people that made the mistakes leading to where they are now were actually did that because they were paid too so the compensation structure needs to be changed take the top 500 officers half their pay should be sequestered used to pay penalties paid in convertible debt such that if the bank does go insolvent changes of the stock which would be basically worthless that wouldn't set of eyes these managers to put the integrity of the bank ahead of whatever gambles that their particular division is engaged with sun now how this actually come to happen after the last financial crisis we actually placed certain risk parameters that were set in place for something like this to actually never happen again so how do we once again find ourselves staring at the brink of a potential collapse of 150 year old banking institution basically at the epicenter of the e.u. but we certainly wanted to put risk parameters and. guardrails but in fact we only

took the most tepid steps the 2010. wall street reform and consumer protection act was really the compromise that wall street let us have so for example. the so called healthy j.p. morgan its capital is only about 8 or 9 percent that is to say assets minus liabilities what's left is that 8 or 9 percent it's 92 percent leverage whereas deutsche bank it's it's down there at about 4 percent meaning 96 percent of its of its assets are paid with borrowed funds and what are those assets as you pointed out before they claim a certain book value but maybe not as with bear stearns when they had to mark to market they found themselves essentially insolvent finally. back in the other big banks have grown very fond of gambling 90 percent of the gambling takes place within the banks themselves so it's not necessarily wall street versus main street

90 percent of his wall street versus wall street derivatives are all bets somebody when somebody loses guess who the loser has been deutsche bank and i mean there isn't really a nasty word i mean we tran like it by direct was actually a really common instrument and banks as you mention use it all the time the danger is when they present a systemic risk to the massive counter parties who are the counter parties to to do it and do they have to they have exposure to systemic risk if they collapse the one of the biggest problems with financial stability is that we don't actually know they may know but the public doesn't necessarily know so the i.m.f. and others have tried to chart the interconnectedness of deutsche bank and the other banks but in fact these are the biggest risks and if bank fails to make good on its derivatives bets that's the vector through which systemic tremors take place when the biggest. writer of credit default swaps failed it essentially

hundreds of billions of dollars that it couldn't pay the bailout g. was really a bailout to their counterparts goldman sachs and for example deutsche bank got $11000000000.00 of united states taxpayer money to make good on the c.d.s. is that you could not make good on sun i would compare the situation on to bear stearns on live and they're actually really pretty similar bear stearns a collapse in confidence that drove it to the very brink of insolvency i just like right now the shorts are absolutely piling on and funds are stampeding out withdrawing their assets rand tech their biggest clients have actually withdrawn so now tell us more about the impact of the losses of these clients that they're facing and i mean the shorts are increasing every single day could they actually drive back to insolvency before they even have a chance to recover it's a vicious cycle so more successful banks the winners of these swaps their cost of capital is less the losers their cost of capital is more and so as they are

depending on short term money that really it's overnight and week to week funding as that funding go grows more expensive even their winnings aren't enough to pay for the borrowed money that they used to try to make these scandals so yes the similarities with their sterns are are are justified. confidence unfortunately is necessary because when you're at such a thin margin and what the public believes determines your fate while a nailer financial policy advocate or public citizen thank you so much for and say thank you. it's time now for a quick break but hang here because when we return in the wake of constant terror threats exporters exports from mexico to the united states have spiked lauren fix the car coach joins us to break down the boom of cars coming across the border and

as we go to break here are the numbers of the close. during the great depression which i'm old enough to remember there was most of my family were unemployed working class there wasn't it was bed you know much worse subjectively than today but there was an expectation that things were going to get better. there was a real sense of hopefulness there isn't today today's america was shaped by the 10 principles of concentration of wealth and power. reduced democracy attack solo down engineer elections manufacture consent and other principles

according to no on chomsky one set of rules for the rich opposite. that's what happens when you put her into the hands of narrow sector of will switch will is dedicated to increasing power for chills just as you'd expect one of the most influential intellectuals of our time speaks about the modern civilization of america. i i don't want to tie. news agency forgive me will have to find someone to. lower the trying to stay with us to get me out of the going to be just like the

jews. so i. see and feel that where. we have to be. 2 i think i can.

fight. it's an indication of how. towards we are definitely winning it because we have the people they have people in power but we are the muscles. and so you can forget. the. these were spits and for me it was actually putting some ice into my wife's glass of gin and told me the song on the sound of the glass reminded me of how we can all these queens in bali which was with banks of supermarkets are.

welcome back on tuesday pakistan will receive $1000000000.00 instalments from the international monetary fund under the recently concluded $6000000000.00 bailout package the bailout was aimed at stabilizing the nation's economy and institutions and will require very ambitious fiscal measures for the bailout to succeed a central part of the program will involve cleaning up accumulated debts in the power and gas sectors and in loss making state enterprises which include pakistan international airlines pakistan steel mills and pakistan railways these losses have now amounted to the equivalent of 4 percent of g.d.p. posing a serious fiscal risk there's 3 or bail package will be pakistan's 13th bailout package since the late 1980 s. the nation is struggling with slow growth in a budget deficit which has climbed to more than 7 percent of g.d.p.

the currency revert serves standard less than $8000000000.00 or enough to cover nearly 2 months of imports clearly these billet packages are not sufficient and the nation will have to assume tough policies and forms to turn the ship around. i.b.m. announced tuesday has closed $34000000000.00 deal to purchase open source software company red hat and marking the largest acquisition in the 108 year history of the company they agreement between i.b.m. and redhat was made in october of 2018 but had to wait regulatory approval in the european union and the united states the deal was made $490.00 per. a share in cash a 63 percent premium on top of the stock price on the news i.b.m. stock was down just under one percent on the day while red hat management team must stay in place with red hat c.e.o. jim whitehurst joining the i.b.m. senior management team under steve ginni rometty i.b.m. hopes to use the acquisition to make inroads in the highly lucrative college space

opting to put together multiple platforms rather than trying to head to head with sector leaders like amazon microsoft and google. a record setting 2600000 vehicles into the u.s. from mexico in 20 teen amounting to 15 percent market share the latest figures show mexico come sharing an even greater share of the u.s. auto market in 1st half of 2019 from january to june of this year mexico countered 16.3 percent of the u.s. auto market that works out to $1370000.00 vehicles coming up across the border according to the major mexican auto trade group for more on this and all of those we are joined by the car coach lauren fix welcome back lauren. thank you for having me now lorin this surge of mexican auto exports to the u.s. in the 1st half of this year happened of course despite the very high profile terror threat from the white house against mexico over immigration issues how do

these 2 sides of the picture fit together it is apparent conflict with this booming trade relationship and cars. well on a motive industries have always had a plan so they don't need vehicles they're going to produce especially if they're launching a new vehicle and if they're producing it in mexico they have to get it to market so they didn't let the tariffs impact them and the fact that they've put the tariffs aside for now and it seems to be that we're putting together a u.s.m.c. a they're planning to continue bringing vehicles across now if they said today there was a tariff they couldn't stop production they might slow production but they couldn't stop and so these vehicles were already in the pipeline they were already being produced and all the raw materials were already there in order to produce those products so they disfigure will discontinue sending as much as we can while we can until they're terrified tension comes into play because the inventory out the door sounds like not move actually you know what seems remarkable though is the lack of concern from corporate leadership about the reliability of their production change

certainly the tariff that was a big story politically but on the corporate level they don't seem worried about it b.m.w. board member told c. and b. c. our production network is flexible but at this point i don't see any reason to change our plans is that kind of confidence justified or prudent in the long term. where you have to remember b.m.w. had planned this for a long time some brand new factory audi has a brand new factory and they want to get obviously the most for their money so they had already planned to make x. amount of vehicles and they're going to get them out as quick as they can like you said get that inventory out of your ship into the u.s. as quick as we can because if those tariffs come into play or different laws come into play that could affect the bottom line so they want to make as much product as possible so manufacturers are paying attention to this even though it may seem as if they're not sent out speak and. that company says that they will have 25 electric and hybrid vehicle models for sale and want by 2023 moving that production target up by 2 years from previously announced plans this news came out of the next

gen 2900 auto show in munich now we know that you are a noted skeptic on electrics and hybrids why is your take on the business sense of this move by b.m.w. . well b.m.w. had to do something harold kruger who is their current c.e.o. is stepping down 2 months before his one year period he's not going to renew his contract and the reason for that is he didn't move quick enough in order to transfer existing b.m.w.'s to electric vehicles they feel they've lost some of the market share maybe in europe but here in the u.s. are still extremely slow growth and if you look at the numbers not the percentages you see there's of only a few 100 jedward pieces or a few 100. being sold the b.m.w. i 3 just aren't selling that well here in the u.s. and on a global basis they want to have a piece of that pie so they are moving it forward and again there's going to be a new c.e.o. so that will be some big changes to it now sticking with electrics even hybrids will need a new generation of batteries and bloomberg is reporting that the european union is

embarking on what sounds like a bit of an industrial policy summary to effective methods that we've seen used in china to promote the development of state of the art batteries the european commission's vice president is reportedly the made the point man on coordinating more than 100000000000 euros that the e.u. officials are working to direct into r. and d. and manufacturing president macaron is quoted that he cannot be happy with the situation where 100 percent of the batteries of my electric vehicles are produced in asia is this level of commitment enough to change that game and move markets well it could actually be a game changer it depends how things actually unfold right now every single battery is beholden to china they own all the mines whether it's neodymium cobalt lithium mercury and because they own all of those mines they get to control the industry and who gets what so they're looking in the thinking what can we do can we create a solid state battery which is a different type of battery not using rare earth minerals that come from mines that are owned by china if they're able to create something different not using those

minerals or maybe a smaller portion of those minerals you could have a game changer which would lower the cost of batteries but as of today there is no other. option and because china is basically holding all the strings it's making it more expensive for other manufacturers to produce batteries and of course we still have a problem with the recycle side of that and hopefully if they come up with a replacement that they will be a recyclable portion of that as well that's a very insightful answer there lauren and just quickly turning back to those 1st have sales figures for this year that we mention just quickly is there any big story that you think. is appreciated in those 1st half sales figures you know right now it looks like sales are down about 2.4 percent which is about bringing it to $16.00 average here in the u.s. 1 the vehicles being sold but car sales small car sales are the only thing that's doing ok car sales overall are down 11 percent but luxury is up 1.5 percent and that's huge that means the brands like audi b.m.w.

mercedes are doing well vogels up 60 percent that's a huge story their product is selling really well and the koreans are doing really well with the g 70 the telluride in the cone out those are their big sellers and they're selling them as fast as they can get them so that tells you that long warranties and luxury brands are doing really well excellent insight as always from lauren fix the car coach thanks for your time. thank you. and finally the european union's competition commission has fined sun rio the company behind the hello kitty brand 6200000 euros for blocking retailers from selling merchandise featuring their characters across borders within the with the case the top anti-trust regulator is attempting to keep the bloc of 28 countries as a single market competition commission our margaret investigators said of the fine consumers whether they're buying a hello kitty mug or a chuckle cat toy can now take full advantage of one of the main benefits of the single market the ability to shop around europe for the best deals some real

avoided a larger find by cooperating with the case which was also brought up against nike and universal studio earlier this year night he was fined 12500000 euros while there has been no current decision against the case in university well you know we've heard about regulators going against powerful corporations but i mean margaret investigator is ready to go against. the stand we are stable of characters it's not just hello kitty carol karoubi other obviously very popular characters i know i don't think people know how big the sun is actually how popular that brand is it's so powerful they control so much franchising power so i think it's a good time to bring up this topic. that's it by this time you can catch boom bust on directv channel 321 dish network or streaming 247 on t.v. the t.v. ad. war is always have us up at you tube dot com slash. see you next time.

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list slim. lift. and a very warm welcome to you watching us in such. it

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