safer today than at the time of the lehman brothers crisis? i would say not quite yet. >> christine lagarde said banks should be financing the economy and helping to stabilize it. she criticized banks that failed to reform following the lehman brothers collapse in to douse any. the imf had praised efforts to deal with the euro crisis but said the work is far from over. >> from the imf perspective, we believe that more needs to be done in order to really complete the architectural job of the eurozone. and monetary union, a banking union, followed by a fiscal union. >> christine lagarde warned that the imf believes the world economy will continue to weekend, it would cut its growth forecast in its upcoming global outlook. >> in the market here in europe ended the week on a sour note. investors are concerned about a slowdown in the united states after it posted weaker than

of lehman brothers. and said in the memo and this executive matthew lee was in charge he was executive in charge of lehman brothers global balance sheet so he was a very relevant high level person and he said in the memo. i feel that it is like ethical and legal obligation to bring to your attention the fact that there are billions of dollars of unjustified assets on lehmann brothers balance sheet now that seems to me a pretty clear indication that there's something inadequate with your financial controls. and and there's similarly equally explicit evidence about. many other examples including the executives of goldman sachs lying to customers. about the nature of the securities that they were being sold right and i thank you for getting some of those that concrete examples i do think that's helpful. and you got lots more helpful information from my charles ferguson interview after the break also still ahead wall street bankers may know the beta of a stock or portfolio but it seems they're also saying yo

of bank brought in only two weeks before authorizing this transfer to lehman brothers and he called it an accidental transfer oh wow it sounds like the j.p. morgan situation where that two billion dollars was accidentally taken out of the m.f. global accounts hoops yes so again you know in the headline of build the biggest magazine in germany read germany's dumbest bank k f w again the bimbo route to the bimbo disguise you know i got this until i got this idea of maybe get americans to save more by creating the k.f.c. bank so they think it's going talking fried chicken and they go in there to gorge themselves on fried chicken or mashed potatoes you charge them five or ten percent put into a savings bank and so you know as i said willie sutton said he never robbed a bank when a woman screamed her baby cried so at least he had some integrity he there was a limit to who he wouldn't kill he wouldn't mean he wouldn't hurt a woman he wouldn't. heard of little baby but these bank robbers of today max they have no scruples like this they don't care they'll pull out a tommy gun to trading their

of course is where we have lehman brothers a i j bernie madoff m.f. global why is london such a crap regulator i think at the the right really set in a big bang in eighty six when he says that should government deregulated the financial sector and she demolished the silo like structures and the partnerships that used to exist within the city and in those days i'm not saying it was totally clean but it was less less easy for conflicts of interest and corruption to occur and the various key dates that as i said one thousand nine hundred two was a key day when there was the last ever criminal trial of high level bankers from the city of london which was the blue arrow trial three senior executives of a bank called that west was given suspended sentences for rigging a rights issue and one that one stop broker who helped them from u.b.s. phillips and drew was also given a suspended sentence for reading a rights issue now the trouble was this didn't go down particular well with the establishment so they they engineered. a court of appeal case in july ninety

bailouts are a choice. >> we ran the experiment i think when we let lehman brothers go. >> did it workd it worsen things, gentleman, thank you so much. appreciate your time, see you soon. be sure to watch "closing bell" tomorrow. ly be talking to barney frank. earlier we asked if you agreed with sandy weill's kaulg to break up the big banks, here are some of the things you said. tom said he is spot on. dump doth frank and refort g glass steagall. but alex says the glass stegall act is old news. keep sending your comments in and we'll get them on the air. you can also voice your opinion on this topic by voting in the yahoo finance poll. shares of zynga plunging right now. >>> the shares falling off a cliff, now down about 35% after the light earnings. another key point here dragging down in addition to the lower outlook. the amount of money that the daily active users are spending decreased. so people are spending less money to play zynga games. they're dragging down facebook, shares also trading down about 7% there. maria back over to you. >> breaking news from john harwood in washingt

with the lehman brothers bankruptcy. at the time, rapid action was called for.here was little time for talk. a first bailout package managed to stem contagion. now, european leaders have agreed on the european stability mechanism to allow struggling countries easier access to funds, but it will require those countries to yield some of their independence. >> if a state is heavily indebted, there are two alternatives -- bankruptcy or bailout assistance that comes with strict conditions attached. and restrictions on their national budgetary autonomy. at that moment, the state is no longer free. where is the autonomy if the only alternative is bankruptcy? than four years of crisis and only now are eurozone countries turning their backs on local solutions in favor of a european solution combining the ecb as banking watchdog, the fiscal package, and the esm bailout package. even economists admit a dialogue >> i can well understand that citizens and national parliamentarians say they feel ignored. we are facing a completely new situations. there are not any textbook so

the global financial crisis stemming from the collapse of lehman brothers triggered a plunge in russian car sales in 2009. dealers only sold about 1.5 million cars, which is about half of what they did the year before. the sector has shown strong signs of recovery, though. salesmen sold about 2.6 million cars last year. >>> well, investors around the world were taking a wait and see attitude on wednesday because the u.s. markets were closed for independence day. and european markets ended lower ahead of thursday's policy meetings at the european central bank and the bank of england. let's get details of how stocks are trading this thursday morning here in japan. for that we're going to ramin mellegard at the tokyo stock exchange. good morning to you. pretty thin trading conditions with the u.s. on holiday on wednesday. how are stocks trading today? >> good morning to you. in the absence of the u.s. markets, most of the focus was on the european markets. and a lot of focus on energy-related stocks which we've been following here throughout the week and also in the banking sector also fol

and sell short recommendations are at their highest level since the lehman brothers collapse in 2008. selling short is a technique to profit if a stock price is going down, but the pessimism isn't expected to last. >> once we get through the period the sentiment seems to be the fourth quarter should be a lot better. >> tom: historically, the fourth quarter during a presidential election is positive, up 2% on average for the s&p 500. among the stocks murphy says are seeing bullishness from brokers: discount retailer dollar general, biotech drug maker vertex pharmaceuticals and financial giant a.i.g. >> the gary thayer is the chief macro strategist of wells fargo advisors joining us from the gateway to the west in st. louis, is this a matter of just surviving the third quarter hoping to thrive in the fourth quarter? >> well, tom, you know, we do have this uncertainty lingering here affecting a lot of investors and their attitudes toward the market. but you know, it's one of these environments where we think the fundamentals are a little positive right now with the monetary easing that w

to the associated press, a former sheaf of shearson lehman brothers saying of mitt romney "i think he's a plain talking guy." the shearson lehman investment brothers guy made the comment as he chewed a cigar in his black range rover outside a romney fund-raiser expected to generate $3 million. cigar chomping? this has to be satire. look at the photos from this thing. look. look at the caption on. a southampton police officer directs a rolls rosie arnts the protests are around the estate of david koch. actual rolls royce. an actually porsche. an actual i think second in line is that a bentley? maybe it's another rolls-royce. it's definitely behind an actual bmw. all of the coverage was from just outside these three hamptons fund-raisers because there was no press allowed inside. two cnn reporters did report overhearing what mitt romney told his cartoonishly affluent and callus hamptons audience. he said "by the way, he said the, you guys are doing fine. if you're here, by and large, you're doing just fine." see, people paying $25,000 to go to this event by and large mitt romney thinks th

blares lehman brothers even they got really down and dirty with these i.p.o. pump and dumps but to do it now at this stage of the game when the criminal fraud is so apparent in every single aspect of our financial economy right down to the very nub of libel or manipulation. it's almost it would be like as if it would be use of sandy weill came out and said that he's against big banks and wants to break them up and bring what glass steagall of course that's impossible that would never happen well max of course. operates farmville in which people around the world grow virtual vegetables and raise virtual cows there's also a drought happening in the real farming world report drought intensifying across oklahoma and u.s. drought monitor report shows parts of northwestern oklahoma in exceptional drought the western one third of the state the panhandle and parts of the central two southeastern oklahoma are in extreme drought while most of the remainder of the state isn't severe drought the only rain do max is no golly washer or strangler as they say down those parts

queen bob diamond the welfare queen just a subsidy by being a primary dealer by the way they gave lehman brothers for next to nothing after the engineer the collapse of that bank another gift the bob well headline reads i won't go says bob diamond despite calls from prime minister for him to resign over market rigging scandal again look at that headline market rigging scandal this is a crime it is in the crime pages of the newspapers it's not a little scandal. but bob diamond was able to say i'm not going to go david cameron s t f you he said to him right well i mean there are scandals and the crimes are coming fast and furious to coin a phrase i mean you've got this diamond on top of the what nine billion that was revealed to j.p. morgan's balance sheet that they are involved in another massive creating fraud on top of the m.f. global jamie diamond again stole money from customers on top of a top of the last four years of all the baggage they're getting bigger and getting more outrageous its moral hazard you could call it or just a crime wave well max here's a headline misselling derivatives bar

occasions by senior management of citi group in senior management of lehman brothers among others it seems like with this example you gave us our brains oxley it seems like you have a disaster like enron and then you have an effort to regulate so that it doesn't happen again like with sarbanes oxley and then you have the same practices that continue and post enron go unpunished so my question for you what is the point of regulation f they're not enforced is it just for show yes it is for show it looks as if the regulators are there to protect the bad guys we didn't hold c.e.o.'s of our major banks accountable for accounting statements that they signed off on in two thousand and seven that were false. so happy tenth birthday sarbanes oxley is there some bigger lesson here given that your birthday is that's kind of a nonevent because you aren't really a big deal anymore seemingly they're bigger lesson about regulation i want to bring back jeffrey tucker executive editor of laws a for books and author of the upcoming a beautiful anarky how to create our own civilization in the digital a

we'll talk with brad lynch, former cfo at lehman brothers. >>> ben bernanke headed to the hill to talkrker will tell us what he expects to hear. >>> breaking data on inflation, consumer price index numbers for june due out at 8:30 a.m. eastern, we'll talk inflation, the fed and the markets with pimco's mohammed el aryan. the second hour of "squawk box" begins right now. >> welcome back to "squawk box" here on cnbc. we are first in business worldwide, i'm joe kernen along with becky quick and andrew ross sorkin. u.s. equity futures are right back to where they were, on coke and goldman they went up a little, and then j&j, back up around 37 points or so. there are some big numbers from companies today. >> let's walk you through some of the numbers, major companies reporting this morning, goldman sachs reporting earnings of $1.78 per share, versus estimates of $1.16, handily beating revenues and beating the forecasts, although ceo lloyd blankfein says that market conditions deteriorated during the quarter. coca-cola beating street expectations, reporting second quarter earnings of $1.22,

and goldman sachs and lehman brothers and these were really nice, smart folks that had been around the block of it and the appreciated a lot of the stuff and they all said you know what, you are a nice guy but we don't hire political scientists we hire economists and strategists and physicists because it is useful for the model and increasingly. but they don't have political science. so after a year i was frustrated and i said if you are not going to hire me for your company if i were to put out a shingle and call it the eurasia group because i studied eurasia and the guide was not credible, then would you hire me and become a client, and they said yes. so all of a sudden i have all these clients and that's how i started it and at the beginning because no one knew what the hell this stuff was i had to go and explain here's what a political scientist does and what can be useful to you and a lot of them were helping me to say okay that's really interesting. here's how i would like it because it's not like i decline and said or business plan. i didn't. i was just doing it. what has change

with a company called ddi which ended up being investigated by as part of an investigation that lehman brothers paid over a billion dollars to settle with having to do with allegedly bain people putting pressure on one side of the lehman company to jack up their rating on ddi which lehman was also handling the banking for the ipo and one of those kinds of deals. romney's name and signature are on those documents of selling bain shares in that. but he has also maintained i had nothing to do with that because that took place while i was gone even though his name is on it. and so on. and things can be conflict of interest issues and so forth could come up. and are likely to come up as this goes along. he'd like to draw this distinction now before those become issues. >> chris, i mean, clearly there's a reason for him to try and distance himself. but again, i repeat the reason it's important, we're talking about people's jobs. we're talking about a man that wants to be president of the united states when he's outsourcing. and talking about a man who has been dealing in the cayman islands and bermud

. >> it's also the case that barclays took over lehman brothers.has just carried on and on and yet mitt romney tells us no regular lations regulations. >> these men not patriots. they're transnationalists. whatever works out good for their institution. as most americans are about to celebrate july fourth, it is not about helping america. it's helping the bank that doesn't care about america or about england. it cares about its own profit centers. >> professor, that's right, isn't it? the only thing they're focused on is the profitability of their bank and bank account, even if it involves fraud and deceit. >> money is the new citizenship. we know international boundaries are shredded when it comes to global expansion of capital and we see this predatory behavior on the part of barclays and diamond and as our distinguished guests have indicated, we have taken this at the new normal. this is a ridiculous affront to any sense of check and balance. no sense of regulating capital so that it won't flow into our coffers. guess what? the supreme court aide

with lehman brothers they let it go and the economy started to freeze up, so aig did not ask congressd authority they had to get that money to aig, but paulson said that's not a good situation. he urged us to adopt rules that said if a institution can't pay it's debts and having an impact on the economy, you put it out of business and kill it. >> i remember this and it was very important. very smart. >> put it to death, and then you let the fdic, our i did involver of banks, say okay, they're so big, we may have to pay some of the debts but only as little as we need to keep the economy from freezing up, and most importantly the institution dies. no more aig, and secondly, every tax payer will be recovered by the secretary treasury from large financial institutions. >> let me try to get to the bigger issue here, and it is a frustration with the fact that americans feel we can't get anybody together in washington. let's talk about the fiscal cliff. kristin legard saying the fiscal cliff is a big problem for the u.s. economy. we don't hear anything that we're going to do. with all due re

aig was about to go under and we lost lehman brothers and aig is better than a was but not what it was prior to the decline. it amazes me that credible people would make such incredible statements and that adds fuel to this flight of confusion that is engulfing us. people want to have some credibility to speak truth about the conditions. it is just amazing that this line of logic seems to have some degree of credibility in certain circles. if you would, just for the record, is the auto industry in better shape now than it was? >> it is producing more cars and is more profitable, yes. >> is the banking industry in better shape now than it was in 2009? >> it is more profitable and has more capital and is making more loans. >> is the economy in the main in better shape now than it was in 2009? >> again, it is now where would like to be but many parts of the economy have improved, yes. >> my lexi -- my next line of question will have to do with something we refer to as structural verses cyclical. you cannot solve structural problems if you use cyclical solutions, generally speaking. it is

the ceos of the very companies lehman brothers, aig, merrill lynch, goldman sachs and grasso was supposedlate coincidence? of course not. the economy was chaired by ken langone. after we brought the lawsuit they converted to become a for- for-profit entity, and they claim that they lost jurisdiction to seek recovery of the money. in a horrendous decision a mid-level appellate court found for them on that issue even though it was factually wrong. here is what the dissenting judge, judge mazzarelli said, on its face, this argument is meritless. she is correct. she that a not-for-profit still remained and the ag's office was still suing on their behalf. we had jurisdiction. our arguments were correct. this horrific appellate decision was issued after i left office. the ag's office had an automatic appeal but they chose not to take it. perhaps the then ag should be asked why not. but let's be clear. the report accepted by the nyse board and the trial court found grasso was grotesquely overpaid by tens of millions of dollars by a not-for-profit. you can go to the website where we posted all of

>> well, i think that everybody is on the edge of their seats and they're waiting for a lehman brothersoment. i mean, it's truly across countries, it's across industries, it's amazing. >> so the companies you're dealing with are specifically not hiring because they're worried about another lehman kind of moment? >> absolutely. absolutely. the ceos i've met with just here in europe over the past three weeks, it's amazing the stories. energy companies. everybody's operating from the same playbook, you know, uncertainty is certainty. and we've got to break through this. >> what is the lead, what is in their mind, the lehman moment that they're waiting for? what is it? >> you've got a transition in china. they've now cut rates, which is good, but that's going to take about a year to work through the global economy. you've got a potential leadership change in the united states. you've got a fiscal cliff in the united states. then of course, you've got here where everybody's kicking the can forward, which will probably happen in the united states as well with the fiscal cliff. >> so, actually

he was a guy who was in wall street a little bit, and who had worked at lehman brothers in a washington lobbying effort. he had come out of democratic minnesota politics. that is where he was born. that is where he was raised. he went to princeton, and then came to washington. he really understood the game. the key thing he knew he had to do was to protect the government subsidy, to protect the implied government guarantee that stood behind fannie mae. and freddie mac. >> let me read you another line under a picture of fannie mae headquarters. you say, "fannie mae's sumptuous and sprawling headquarters in washington was designed to resemble the governor's palace in colonial williamsburg." seeing that picture, i start to think, how have we never seen inside this place? have you ever been in it? >> i have never been in it. i have been writing about fannie mae as a political machine since the mid-1990's, but i am not a friend of fannie mae. but i have never been inside. certainly, some reporters have been inside. a "washington post" reporter during mr. johnson's era was allowed to follow h

lot of people think ceo execs are frauds, crooks, liars, especially those of you burned on the lehman brothersas i tell you in "getting back to even" that's the wrong lesson to draw from the crash. healthy skepticism is one thing. if you're going to own stocks you have to extend trust to those who own the companies you have stock in. getting the stock to a 52-week high is a good reason to give the ceo the benefit of the doubt. they are not buying at a high unless ef conviction about the companies or perhaps they have been contacted by other companies for a potential purchase. they have spurned them betting they can go higher on their own. for us buying at the high seems reckless and lazy. most investors wait for a pullback before pulling the trigger. insider buying tells me they don't think there will be a pullback. nothing more bullish than that. sure i want a pullback after they bought but that's the best of all possible worlds and it doesn't happen often. when you see insider buying at a stock with a 52-week high -- [ buy, buy, buy ] -- you may want to buy, too. after the break i will try t