about it take a listen citi group wanted to acquire travelers did acquire travelers before the glass steagall act was repealed and so it was at the time. illegal combination of a commercial break and an investment is travelers which was at the time an insurance company also owned a large investment bank. but greenspan the federal reserve gave them a pass gave them a one year exemption in during that one year exemption they got the law changed repealed. fancy that and now the chairman the former chairman is advocating for something that sounds a lot like it or at least the spirit of it things seem a little paranoid paranormal needless to say this is wall street begin suing itself over line for manipulation here to talk about all of this and more is our co-host today he will stay with us the whole show jim rickards senior managing director at tangent capital partners he's also author of the best seller currency wars the making of the next global crisis we'll bring our guest today resource guru rick rule on shortly but first jim records thank you for co-housing capital callid needed it to be her

them a one year exemption in during that one year exemption they got the law changed they got glass steagall repealed. fancy that and now the chairman the former chairman is advocating for something that sounds a lot like it or at least the spirit of it things seem a little paranoid paranormal needless to say this is wall street begin suing itself over lie we're manipulation here to talk about all of this and more is our co-host today he will stay with us the whole show jim rickards senior managing director at tangent capital partners he's also author of the best seller currency wars the making of the next global crisis we'll bring our guest today resource guru rick rule on shortly but first two records thank you for co-hosting capital account with me today had to be here on this is great it is great so let's start with this these comments from sandy weill because it's really interesting you and i have often talked about the problem with with these massive banks they can leverage depositors to make these huge outsized trades that you said are flat out gambling as in the case of the whale tra

cheryl: you will also say we cannot ring back glass-steagall.here is no way to put the genie back in the bottle. >> it would still be the ideal solution but realistically it would be hard to do that. cheryl: what can we do then? >> that was a little misunderstood the "wall street journal" piece because to be consistent if you're going to take away the reason glass-steagall has been often called the separation of investment banking and commercial banking, but that part d. part is deposit insurance so to be intellectually consistent, yes, get rid of part b. and part day. part a is here to stay. the question is who should have the advantage of that and we do not believe it should be used by investment banking or commercial banks. cheryl: in your opinion do you think the former investment bank, goldman sachs, morgan stanley, do you think they would prefer to go back to just investment banking because they say the phrase proprietary trading around here people look at you as if you are about to stab them in the back. >> proprietary trading was no prob

act sandy weill recently suggested we need to restore glass steagall of course steady while over at citi group and by travelers corp is the guy who demolished the glass steagall but now he's repainting or he's recanted his initial thought. what are your thoughts on this conversion by sending while this foxhole conversion i guess it could cause i'm wonder whether or not the guy has terminal cancer death bed conversions are very common. i know i only when i hear exactly to say he sounds like he's he's at the end of the line and he knows that he's going to hell for having done what he did and now he's trying to desperately talk his way out of hell like any good stockbroker would do you know i do like the fact that he's come clean on this i posted an article on that at the time it's about time that we started talking not only about west eagle but about the broader implication of this which is what i've called one dollar of capital for several years in. and it is all tied in the same principle year which is that the counterfeiting of currency through the unbacked emission of credit is wh

and one of his big regrets was going up against glass-steagall and being part of that.he president with residual voices just flying the status quo. the political establishment is often the last to shift because it's not necessarily a money in a paper bag but bought at different levels. mortgage reform. at the heart of what was supposed to change. >> there are isolated cases that the deadline are homeowners are getting huge principle reductions. not the way the banks are paying for them themselves, but loans that are owned by private investors. there is some benefit. but the core issue of homeowner abuse modification process appears to be going on unabated. that's what i'm hearing from people on the ground, that almost nothing has changed. >> eliot: that's one of the travesty that you talk about in your book. process and principle write down. >> we incentivize bad behavior, the home affordable modification program, they built in that program so banks could rack up late fees month after month after month even when the borrower was making payments. then they're surprised w

movies that predated glass steagall at that time and then why the dust bowl and the crash in the depression happened concurrently and then again today that's an interesting subject to debate whether it's purely coincidental or whether there's something more millan's at play well max the drought is covering sixty four percent of the u.s. so back in the dust bowl days i believe it was eighty nine percent but this is the the biggest since then and we don't know how bad it's going to get but rancher paul sjoberg of clinton oklahoma said he has considered selling office heard of black angus but he would lose too much if he did he said quote most of the cattle i buy three thousand dollars plus per head i'd lose two thousand five hundred more per head if i sold now that's the reason i didn't sell out yeah but why doesn't it take as head of cattle and rebranded as cattle and taken public on nasdaq or the new york stock exchange for ten billion dollars it doesn't matter that every single cat was negative equity and that it's all shrinking and that the environment is crashing the single is able to go

glass-steagall. simple. [applause] then there is the transaction tax so they invest for economic activity. then you have repeal citizens united getting the politics out i am a columnist. >> my jetting why do think we have not heard from our own representatives? reaching out to multiple locations. after wamu collapsed made a show we will the investigation. we will figure out what will happen then it was radio silence. and basically to vie knowledge has ignored it to just like patty murray. >> with these seem to of the aftershock scenario how does that affect two big to fail? >> i couldn't speculate the lingering quasi depression, the eurozone mess and the financial system engaged with risky behavior. everyone is affected. see the jpmorgan chase massive trading loss but these institutions are so big they are shielded. with jpmorgan reporting profits they are gigantic knowing they are bailed out and it is called moral hazard. this is a great question. we get to two much inside baseball and describe the problems

it will be hard to go back to the glass-steagall era. there was crisis all of the time on wall street. one pilot business school, there were firms -- there were dozens of firms. and from time to time, they went under. but it was not an hour shaking event, other than for the people who worked there. that is not to the world we live in today. >> and the little time we have left, i want to ask each one of you, ken, looking out at what is going on over there, and thinking about, whether slowing down is going to be a problem for us. and more directly, about our economy, do you see signs of hope. where you think we stand? >> well on the china, i am looking for some serious near- term -- i think there housing markets -- basically they picked a low hanging fruit. they had a model of investing and stimulating the economy to achieve capital. everyone thinks china is about cheap labor. and it is or was. but it is also about cheap capital but they get from this financial repression. so people with the money in the bank. they earn-interest rates on e

break up the too big to exist banks, ring back glass-steagall, 30 pages, real simple.t in place incentives at the banks don't gamble because then there's a transaction tax and so they actually invest in making loans for project of economic activity. you put in place incentives that they are not compensated excessive risk-taking and repeal citizens united and get politics out of the system. [applause] ima columnist. she actually reports the facts. you mention that wamu had no friends in washington d.c. why do you think we haven't heard a lot from our representatives such as murray and camp all quiet >> that is such a good question. actually at the "puget sound business journal," we've reached out to her on multiple occasions because after wamu collapsed, she made this big show of coming out and saying we're going to lead the investigation into this collapse. we are going to figure out what is going to happen and then it was like a radio silence. she has been extremely quiet on everything and didn't do anything for the book either in its basically, to my knowledge, kind

rick at the too big to exist banks, bring back glass-steagall. 38 pages, rowson o.plause] >> been in place and senate said the banks don't gamble because then there's a transaction. and so they actually invest in making loans for productive economic activity. you put in place incentives that they are not competent taking excessive risk taking an effect repeal citizens united and get politics out of the system. [applause] i am a columnist. he actually reports the facts. you mentioned at wamu had no friends in washington d.c. why do you think we haven't heard a lot from her own representatives such as murray and cantwell? >> that is such a good question. >> at the general of the reporting on the stories, we reached out to her on multiple occasions because after wamu collapsed, she made this very big show of coming out saying we're going to leave this investigation into this collapse. we're going to figure out what's happened in that it was radio silence. and so she's been extremely quiet on everything and didn't really have -- do anything for the buck and it basically

at the time which gave rise to the recovery and it seems to me that that regulatory framework glass steagall f.b.i. see the securities act of thirty three and thirty four was the key in the recovery all to me but i want to ask you something about systems analysis for a second if i have a very complicated system an error a complex system analysis on a list and that system let's say is tied to units of risk if i add one unit of risk to that complicated system and my adding to the complexity and in a linear way or am i adding exponentially the rest to the system professor whoa. the answer is more subtle it's neither linear nor exponential it's usually some power law but what it means is that indeed there. extreme events that are much more likely. recently. they've been called black swan events right they're much more likely then we expect based upon the quote normal distribution of behavioral and complex systems are generally characterized by having a much higher probability of extreme events these are collective actions panics and bubbles and things that involve many people or many actors doin

who comes in with a new book or a commission and brings in glass steagall and f.d.i.c and other things then these people continue to have their money stolen look at facebook i mean we talked to you before the facebook went public we said it's a bomb it's a stinker don't. with a ten foot pole it's going to be down fifty percent within six months i virtually guarantee it but people bought it anyway because they're on facebook it's virtual it's a digital narcissism because they're on facebook and they like wow i can buy into myself playing with myself with my other solves who are exactly like me and myself and my digital narcissistic magic mirror and i can own part of this well i want to own it at thirty eight dollars a share down fifty percent in six months. i guess i mean also exposed since then is that facebook is just littered with bots people actually are friends with max kaiser on facebook who is a fake max keiser and the guy talks to the viewers of this program as if he's you so this is like the whole world we're living in this superstitious magical freak world this artificial supe

see glass steagall which set the stage for what's called the american century thanks to f.d.r.'s bank reform that's the last another depression this is the one completely krugman gets wrong completely what ben bernanke a good strong their lessons from the depression are completely wrong they think it's about a fiscal policy or a monetary policy we need to avoid those mistakes none of them mention the fact that there were penalties meted out for financial crimes to wall street and the book or a commission that's what set the stage for the american century after you are saved wall street ok you libertarians out there you know recognize that because you're intellectually lazy and you're well here's another reset of this banker here that because there is no punishment no deterrent let's look at this exclusive several banks seek leniency in e.u. europe or probe several banks under investigation for suspected euro rate raking have joined door to banking giving information to trust regulators in the expectation of lower fines if found guilty the european commission is investigating pos

greenspan who went about trying to fix something that he saw as broke him so he got rid of the glass steagall act he got rid of certain aspects of regulation of the markets and regulation of fraud and prevention of fraud whereby sellers of fraud sellers of fraudulent products were able to sell to buyers like pension funds who had no idea what they were buying and whenever this fraud threatened to take down the markets he thought he should fingerpaint the markets make them a little bit better with the greenspan put he would go in there a lower rates so that the likes of long term capital management did not lose because for him this was a better way for the markets to look but it's become a global model this idea that no matter how much fraud is perpetrated and of course you talk about pensions and knowing what there were buying i mean they were mis sold products they were sold tainted products illegally and every time it blows up you have a few pensioners allusive all plus the central bankers come in with more easing more quantitative easing to cover their tracks to paper over the crimes until

. >> would you say the end of glass-steagall caused the financial crisis? because you had your investment banks behaving no more as investment banks but also as free money hedge funds because they took accounts where they had free money and they operated as very highly leveraged -- >> the reason i asked is when you think about the crisis and think about lehman, bear, aig, fannie, freddie, they had nothing to do with it, wamu or merrill, it's unclear that glass-steagall was the issue. >> no, the banks were leveraging 5,000 -- >> that won. >> if you take the derivatives in and nobody else could do that. they were not only leveraging 5,000:1 but leveraging on free money and guaranteed more or less by government whatever happened they'd be brought back to profitability and the government in fact brought them back to profitability. >> what's the answer? >> they're underwater still and the only real answer is to separate the investment side and the banking side. we have to go back to gathering funds, lending them out responsibly, that will help the economy a lot,