remember this economic crisis, the collapse of lehman brothers, mid september 2008?he economy was in free-fall. stocks tumbling. the great recession was hitting with full force. and millions more would lose their jobs. well this week, a survey of consumer confidence posted the biggest weekly drop since then, since lehman went bust. about three times as many people now say the economy is in poor shape as those who say it's doing well. you can thank washington for that. for other stories, give me 60 seconds on the clock. it's money time. ♪ >> raising children is more than just a daytime job. parents are happy 35% of the time caring for kids and feel the same way 19% of the time at work. there will be no women on twitter's board of director when is it eventualitily goes public. all seven members are male. the lack of female leadership is a problem in silicon, but google, and others have one at least female member. starbucks is giving akwa free cups of coffee this week. if you bought a cup for a friend, starbucks gave you a free one in return. >> have a good day. >> repo

the one i remember most vividly was after the collapse of lehman brothers. we started to see a cascading effect of markets seizing up. banks would not lend to each other. there was no liquidity. hank paulson, the treasury to ask for ame in meeting with the president and his senior advisers. him thelson had with chairman of the fed, ben bernanke and the president of the new york fed, tim geithner. we also had the chairman of the securities exchange commission present and a couple of other officials. it was at that meeting that hank paulson asked the president for authority to go to congress to request what turned out to be outt $1 trillion in bail money for the banks. to use it for other assets but it was used to inject equity into a lot of trouble institutions. for a goodking thing solid republican president to be confronting is the treasury secretary coming in, saying, we need $700 billion or $800 billion immediately from congress in order to use that money to rescue banks that are failing. this was one occasion where the president made a decision on the sp

have been in a little bit of chaos recently and i'm not saying that we have a lehman brothers situation just yet but we have the makings of it right and actually fitch one of the major rating agencies and we all know there is good. is there they are they recently put u.s. debt at what is this negative watch quote a negative watch and it's reminiscent of when s. and p. they outright downgraded u.s. debt in two thousand and eleven to what was it a plus big a big a little anyway they don't simply did great it in two thousand and eleven get the markets pick up at that point so what are the long term consequences of all of this because there has to be long term we're looking at the short term now but no one really can of forms that i mean just imagine that story about the boy who cried wolf how many times can congress kick this can before the market catches up with them well we saw here recently was something unprecedented there's something called the ted spread the euro dollar spread another short term funding market indicator that went negative for the first time ever so eventually if cong

>> probably the immediate aftermath of the collapse of lehman brothers. there's an ongoing cascade of traumatic events that led up to that. but in mid september, over a weekend, lehman brothers, despite our efforts, i say our -- i mean the efforts of the treasury and of the fed to -- to put together some kind of rescue for one of america's big and venerated investment banking houses, that failed over a weekend. and as the week opened, lehman brothers declared bankruptcy and folded. abruptly. and i think that was -- that was the first moment that i at least felt that the wheels of the bus might be coming off. >> do you remember what the president said to you at any time and how you got involve in dealing with the crisis? >> you know, i don't -- i don't remember what the president said immediately at that moment. but there were several moments during the crisis when the the president would take in all -- all of the advice he was getting. chew on it, reflect on it. and in those kinds of circumstances, he rarely made a decision immediately on the spot. he wou

>> i would say, i defer from james in that last time he said this isn't lehman brother, lehman brothers the last remaining of the weakest investment bank after bear sterns and shouldn't have triggered a global recession. the government of america missing payments is i think substantially more serious than lehman brothers. there were a bunch people in a room on september 14th, 2008, ben enter knack i.henry paulson, tim geithner who were smart people who thought the failure of lehman brothers wouldn't have a particular impact and it froze credit around the world and sent us in to a major recession. i think it's dangerous and james knows much more about economics than i do, but i think it's dangerous to put out there that this is just not of any particular major consequence. we just don't know that it is or isn't. why don't we say that it could be so downtown do that. we don't know if you run in to the middle the street you are going to get hi hit by a car but that doesn't mean you run in the streets you prevents yourself from doing. >> even last time when we flirted with default poor coun

that's a lehman brothers style event. "west wing" aside we probably would see a global fallout from that. >> we have chris voss, crisis negotiator, and i can't tell who is at war with who. if it's the democrats and the republicans, if the democrats are the republicans are at war with each other or just exactly what's happening there? >> it's all of the above. part of the problem people aren't talking. there isn't a back room negotiati negotiation. there hasn't been a normal prenegotiations before we went to this crisis because trust is so broken in washington. so that is a fundamental problem. you know, boehner can't control his caucus. when he tells his own members or business that don't worry, we're not going to default, well, these are a lot of the same leadership who did don't worry, we're not going to have a shutdown. there's a trust cries sglis you said two words. credibility and trust. so you're in a situation like this and neither have either, that causes a real problem when you're trying to stand things down, doe

liz: level three you are getting into lehman brother territory.r two, you are basically comparing assets out in the market where you would hope would give you a cash position. we should also mention that they are sticking up for you guys. >> one we did release by account. it shows what interest rate we are earning. liz: i am looking at more than $200 million. >> we are actually looking at 300 million. we had to investment banks independently audit and certified our cash balances in the last 24 hours. liz: can i ask you who those banks are? >> we cannot disclose them. liz: why can you not disclose them? how come? >> we have to get there permission. liz: they ought to be in a little bit of panic about this. >> they are standing right by our side. you asked in term of business, how our business functions. obviously, our business on a security side -- liz: are you going to sue muddy waters? carson just said bring it on. he is a lawyer. he, i assume, is not just talking bold. he has great evidence that will come out in discovery. >> if we choose to go

the instruments that were coming out of bear stearns, lehman brothers, things like that. he is the person to be speaking on this issue. you just heard terry duffy say they will be lasting damage to the u.s. because of the protracted impasse of washington. even if we get a deal today or tomorrow, we may not be out of this yet. twitter's decision to list on the big board instead of the nasdaq is a huge win for the new york stock exchange. is it a game-changer? does this now force other companies to say i will go with the nyse instead of the nasdaq? we will see if it can regain its strength. when we made our commitment to the gulf, bp had two big goals: help the gulf recover and learn from what happened so we could be a better, safer energy company. i can tell you - safety is at the heart of everything we do. we've added cutting-edge technology, like a new deepwater well cap and a state-of-the-art monitoring center, whe experts watch over all drilling activity twenty-four-seven. and we're sharing what we've learned, so we can all produce energy more safely. our commitment ha

. >> guest: day happens to be true lehman brothers was around when i did 50 years. bear stearns over 80 years. disappeared. gone. just like that. universities, its institutions it will be a mess there are too many people running up too much debt in somebody has to pay it in the end. >> host: is in singapore more highly regulated? >> guest: no no. with the economy is one of the most open and free economies in the world is now a gets the bad reputation you cannot even chew gum he can't -- you can buy it you cannot spend it on the streets or put it under the of bus seats they don't like that if you ever go it is a very clean nation in a like people throwing garbage on the street or spitting. >> host: doesn't have its own currency your federal reserve system? >> nearly every nation does these days it does have a central bank because it is 5 million people it doesn't have the influence of world affairs such as the united states now it has been the most successful country nobody has done as good a job as they have and they had huge reserves but no matter how influential o

. >> worse than lehman brothers and great recession by the failure of lehman brothers. >> it would be worse in my judgment and i think it's needless. >> because congressional and political leaders should be acting. >> we have a budget system that is unlike any other budget system that i'm familiar with. we have spending and revenue measures that have orange nalted from an original act in congress. now it's a question of funding them. the spending has already been approved, but now the elected officials are balking at funding that spending. >> all right. a sober warning this morning. john chambers, thank you. >>> and if the debt battle wasn't going on right now, this story would be dominating the news. the rough start to obama care. it has been more than two weeks since healthcare.gov went live. people out there too. s jan crawford is on capitol hill. good morning. >> reporter: good morning, norah. good morning, charlie. rough start is an understatement. we can't even find anyone who's enrolled. "the miami herald" is now calling them urban legends and now on capitol hill cbs news has l

to get scenes of what we're talking about, five years ago the collapse of lehman brothers send fear throughhe entire financial global system leading to a freeze on credit and a worldwide recession. this time around the steaks are higher. the united states bank is the largest economy in the world, no one imagines that the u.s. will actually default on its obligations, but two years ago we came close. patricia takes us back in time. >> reporter: raising the nation's debt ceiling had been a routine matter until 2011 when republicans in congress refused to authorize an increase arguing the nation's spending was out of control. the issue quickly became not whether to reduce the nation's deficit but how. >> in 2011 there was bipartisan interest in doing something to bring down the deficit. deficits were extremely high by historical standards, and the defeating was about what to do not whether to do something. >> reporter: republicans wants to cut government spending, while democrats favored a mix to spending and an end to tax breaks to large companies. global markets trembled. >> in 2011, the mar

one of the key lessons from the crisis when lehman brothers defaulted is that you cannot predict allussions. if they were plotting, i don't think any of them thought about what if there is a money market that owns the paper that breaks the buck. it's that unintended consequences that make people afraid. a good example is fidelity decided to sell and mature around october 17th. i don't think they think they are going to default or wouldn't get their money back. why take a chance that you have to have the phone call with the shareholders? >> what do they do with the money? >> with the bank deposits or something else. we have weird behavior. one thing that is possible is seeing treasuries go up in value as people try to find the good stuff. >> from the economists, good to have you on putting some of this in english for us. thank you, sirchlt the debt ceili christine lagarde is perhaps the most powerful woman when it comes to money. but first, they are still serving turkey chili at the white house. what is the most unusual ingredient you experienced in chili or have thrown into left over

that would cause a lehman brothers style panic. that is the armageddon scenario. >> what signal does it send when the president cancels a major trip to asia, as he was forced to do? >> i think it shows that the main threat to american power is not the foreign government or a foreign entity of any kind. it actually is the dysfunction at the heart of the u.s. political system. the congress undercuts president such that if the president were to negotiate a trade yell with the asian countries which is why he was going there, the transpacific trade deal, there is no point negotiating with a president who can't get it through congress. i think that is why you see this trip being canceled and it shows the presidency fundamentally weak. >> what does china make of all this? china holds seven percent of u.s. debt. >> china will be worried about the debt, but china will be delighted about the results geopolitically. the u.s. announced a while ago this trip to asia and the strip was supposed to be part of a positive habit. have always been do

that the effects could be more severe than the collapse in 2008, the financial services firm of lehman brothers. stock markets would be sent on a wild ride. and interest on a range of loans would go up, putting another burden on those with home and car debts. si china and japan hold u.s. government bonds. a default would hurt both of those economies and countless others. most investors believe lawmakers will find a way to resolve their differences. they have plum met during the government shutdown. some think that the congressional leaders will ultimately find some common ground. but even if they reach an agreement by theebt liadline th could be adverse effects. they went through these same discussions two years ago. they came up with a deal just two days before the deadline. that hurt the color. one credit agency said they would consider downgrading u.s. government bonds. investors count on americans to demonstrate their leadership in the global economy, but leaders across washington are testing that fate. >>> japanese financial regulators have given mizuho bank a deadline to submit a report o

you didn't rescue lehman brothers. it set off a worldwide panic when it went bankrupt, and i wonder, looking back, whether you think that was a mistake. >> there were many people who said, "let them fail. you know, it's not a problem. the markets will take care of it." and i think i knew better than that, and lehman proved that you cannot let a large internationally active firm fail in the middle of a financial crisis. now, was it a mistake? it wasn't a mistake for the following reason. we did not have the option. we didn't have the tools. the federal reserve cannot put capital into an institution. all we can do is make loans against collateral. >> the day after lehman, bernanke's fed did something astounding. it loaned $85 billion to a company that wasn't a bank at all, american international group, the global insurance giant that was also involved in backing risky mortgage investments. bernanke says unlike lehman, the fed could make the loan based on good collateral in a.i.g.'s portfolio. there have now been four res

as lehman brothers filed for bankruptcy protection, just after midnight. >> this is one of the ugliestve ever seen in my career. >> unfettered capitalism can breed corruption. we're seeing teddy roosevelt's words come true. >> they're calling this the biggest breakup since the great depression. >> we thought we would take you back to the good old days of news when days weren't so good. since the collapse of 2008, we have made remarkable progress, thanks to president obama and the democrats who have passed a lot of stuff to help us get to 42 straight months of private sector job growth, with no republican help. 7.5 million new jobs created. the automobile industry saved. 370,000 automobile industry jobs have been created under president obama. the housing market, where is that? it's finally making a comeback, according to a new study. the market is running at 85% of normal activity. foreclosures are down 34% compared to last year. boehner, if he causes a default, the consequences would be devastating to every single america and every sector of the economy. the stock market would collaps

i don't think -- and lehman brothers compared to the, you know, to our overall debt is not really -- a needle in the haystack. [laughter] but the fact is, you know, they got cavalier about lehman, and they paid the price. they're certainly not going to get cavalier about the u.s. debt. liz: you know, teddy is right. let's take a look at the dollar because it firmed up just slightly although still very much on the defensive against most major currencies, right, phil? >> yeah. 80 is kind of this line in the sand on the dollar. you have short-term traders buying it, reselling it higher, but if we do face in this, you could see a big washout in the dollar index. this thing could slide down to 78. you'll see all the foreign currencies spike up for that, you know, currency shift overseas. liz: great to have you both. great perspective. so here's what the traders say. now what do federal reserve members say? the philly federal reserve president, charles must haver, says the fed's credibility has been undermined, but what does he think about the fact we're now facing a potential crisis? we'v

the american government seized two mortgage giants fannie mae and freddie mac and let lehman brothers collapse in the largest corporate bankruptcy in history. it brought about recession that saw massive job losses, wage stagnation, since then the government has set up programs to help main street's financially wounded. in february 2012 a national mortgage settlement was announced to help struggling homeowners. the deal aimed to assist more than 1 million struggling homeowners by offering up to $2,000 to people who lost their homes in the collapse. allowing underwater but current homeowners to refinance, and partially forgiving loans through principle reductions. housing advocates argue that the in fact mortgage settle did not reach far enough. in a recent earnings report jp morgan published that it's total reserve for legal issues is $23 billion. if the latest government deal goes through more than half of the allotted amount would be depleted. >> joining us now to discuss the tentative settlement with jp morgan and what it means for ordinary americans are dennis heliher an. what stan

that would cause a lehman brothers style panic. that is the armageddon scenario. >> what signal does it send when the president cancels a major trip to asia, as he was forced to do? >> i think it shows that the main threat to american power is not the foreign government or a foreign entity of any kind. it actually is the dysfunction at the heart of the u.s. political system. the congress undercuts president such that if the president were to negotiate a trade yell with the asian countries which is why he was going there, the transpacific trade deal, there is no point negotiating with a president who can't get it through congress. i think that is why you see this trip being canceled and it shows the presidency fundamentally weak. >> what does china make of all this? china holds seven percent of u.s. debt. >> china will be worried about the debt, but china will be delighted about the results geopolitically. the u.s. announced a while ago this trip to asia and the strip was supposed to be part of a positive habit. have always been do

able to pay all of its bills, the forecast is for financial fallout worse than the collapse of lehman brothers. fact -- forecasts are on which wrong, but is it a risk worth taking? candy crowley on host of "cnn's state of the union." ken rogoth is a world renown expert of all things financial crisis. candy, let me start with you. gallup shows the lower approval rating ever, 28%. how badly has all of this hurt the gop? >> certainly we can say definitively in the short run, it doesn't take a genius to know this has hurt republican and the republican brand greatly. do i know that will live through i don't know. it's a long time between now and then. there's a big surety it's stuff an uphill climb, but speaker boehner warned his caucus. and it game clear what was going to happen. he did say we could lose the house over this. it doesn't come as a surprise to republicans, but it certainly is, when you put numbers to it, it's a huge slapdown. >> you saw the poll numbers falling. ken rogoth, registers the sharpest drop. can this recovery right now withstand a government shutdown, a sequester, and then

hit the highest level since the collapse of lehman brothers in 2008. officials say the weaker yen is one of the main reasons. bank of japan officials released the results of the quarterly tankan. the sentiment among major manufacturers stood at plus-12 points, up 8 points from the previous survey three months ago. officials attributed the increase to better earnings by automakers, electronics, manufacturers and other export-oriented firms. they also said sentiment has strengthened among nonmanufacturers. that index rose two points to plus-14 points. growth in public works projects and housing demand is boosting the construction sector. the survey measures short-term business confidence among managers at about 10,000 companies nationwide. >>> the increase in confidence is an important factor in a decision by the prime minister. shinzo abe wants to rein in japan's mountain of debt. he's announcing later in the day he'll race the consumption tax to 8% from 5% starting next april, pairing the move with a newtimulus package to ease the impact on his main ec

that begins with the bankruptcy of lehman brothers in new york in the cascade of disaster.es the congress of the united states, republicans and democrats, mostly the same people who are sitting there now, and in a matter of weeks, they swung into action and they've come to trillions of dollars with a t, trillions into the united states in a stimulus program, in a bailout program. they've wrought in the federal reserve. the -- they brought in the federal reserve. everybody worked together. there was no dispute, no fighting, no gridlock. all the trouble came later. after you have bailed out the big banks, the big corporations, saved general motors, the whole story, suddenly, when it came time to say, taxed the beneficiaries of all those bailouts so the government could happen the -- help the average american, then we had gridlock. then we have fighting. we do not have a gridlocked congress when it comes to helping the people who call the shots. we only have gridlock when the question is what do you do for the people who have suffered five years of this crisis still are unempl

up an interesting point is that fraud pays to be that crime doesn't pay but now crime does pay lehman brothers collapsed and a.i.g. collapse and bernie madoff collapsed and we've saw many financial scandals over the past five years resulting in the central banks in america and england printing billions of pounds or billions hundreds of billions if not trillions of pounds and dollars to reward the fraudsters so what you're saying here is really part and parcel of this whole model of fraud for pay so that p.p.i. scandal they were caught mis selling insurance they were caught committing fraud which should be a criminal offense it is a criminal offense and anywhere but the city of london which is its own corporation has its own laws where fraud is legal and the result of all this fraud was a massive money printing which they are now characterizing as economic recovery even though it has deep base the pound it is debased the economy it has threaten the overall security and national security the country those are taken into consideration the only thing that's going to consideration is that a banker

lehman brothers was shut down and they were jailed. and since then, nobody else is jailed. these are banks that essentially sold mortgages to people who couldn't afford them. and who are now without their homes, and for that, they are getting away scott-free, and that's a real problem. because they're essentially saying these banksers are too big to jail. >> we hear on you that, his organization is corp watch. and it advocates corporate accountability. thank you for being with us, and trouble in paradise, how a caribbean island the latest in >> while you were asleep, news was happening. >> here are the stories we're following. >> find out what happened and what to expect. >> international outrage. >> a day of political posturing. >> every morning from 6 to 10am al jazeera america brings you more us and global news than any other american news channel. >> tell us exactly what is behind this story. >> from more sources around the world. >> the situation has intensified here at the boarder. >> start every morning, every day, 6am to 10 eastern with al jazeera america. heightens

dependent on energy from abroad and fukushima is a big frickin disaster so this economy looks like lehman brothers on steroids once it tips over into the pacific as a probably well in the next few minutes then that will set up a chain reaction to you know we're going to see really some gastric flatulent juices spew from mt fuji in a most spectacular way that we'll probably see a chain reaction of bank failures including deutsche bank that will be quite spectacular and some gold up to twenty thousand dollars of elves my theory was however that i don't see how his policy would have worked any better than what the crazy stuff coming out of the fed and the central bank here is because you know that we have a problem with money velocity as well it's not circulating down to the rest of the economy and he does address that here as well with the quantitative easing happening in the u.k. which is remarkable he says that british banking is dominated by a small number of big banks with just five banks controlling ninety percent of deposits in germany however he says seventy percent of deposits are controlled

up an interesting point is that fraud pays to be that crime doesn't pay but now crime does pay lehman brothers collapsed and a.i.g. collapse and bernie madoff collapsed and we saw many financial scandals over the past five years resulting in these central banks in america and england printing billions of pounds or billions hundreds of billions and trillions of pounds and dollars to reward the fraudsters so where's the.

up an interesting point is that fraud pays to be that crime doesn't pay but now crime does pay lehman brothers collapsed and a.i.g. collapse and bernie madoff collapsed and we saw many financial scandals over the past five years result. and the central banks in america and england printing billions of pounds or billions hundreds of billions of trillions of pounds and dollars to reward the fraudsters so what you're saying here is really part and parcel of this whole model of fraud for pay so that p.p.i. scandal they were caught mis selling insurance they were caught committing fraud which should be a criminal offense it is a criminal offense and anywhere but the city of london which is its own corporation has its own laws where fraud is legal and the result of all this fraud was a massive money printing which they are now characterizing as economic recovery even though it has deep bass the pound it is debased the economy it has threaten the overall security and national security the country those aren't taken into consideration the only thing they take into consideration is that a banker made m

interesting point is that fraud pays used to be that crime doesn't pay but now crime does pay lehman brothers collapsed and a collapse and bernie madoff collapsed and we've saw many financial scandals over the past five years result. and the central banks in america and england printing billions of pounds or billions hundreds of billions if not trillions of pounds and dollars to reward the fraudsters so what you're saying here is really part and parcel of this whole model of fraud for pay so that p.p.i. scandal they were caught mis selling insurance they were caught committing fraud which should be a criminal offense it is a criminal offense and anywhere but the city of london which is its own corporation has its own laws where fraud is legal and the result of all this fraud was a massive money printing which they are now characterizing as economic recovery even though it has deep bass the pound it is debased the economy it has threaten the overall security and national security the country those are taken into consideration the only thing that's going to consideration is that a banker made m

they say it would be far more damaging to global stock markets than the financial crisis after lehman brothers. politicians should stop using the debt ceiling as a bargaining chip. he compares it to nuclear bombs, too horrible to use. the treasury is set to run out of money october 17. united technologies is canceling plans to furlough employees. most employees will be put back to work. they had planned to put workers on leave beginning today. the average for a gallon of regular gasoline is now about $3.25 a gallon. that is down from $3.41 a week ago. i and lack ofy progress. we did have a higher close on friday. at the new york stock exchange i am jane clean with the bloomberg business report. >> would you pay to design your unborn baby? parents could determine which traits their children could inherit. things like the babies i color and taste perceptions. the company said it is all in good fun. >> when they say we should be seeking to predetermined the traits of our children, that starts to go into scary territory. >> it could create a world of genetic haves and have-nots. >> now weather and

as most of you know, and am happy to talk about it in questions, the fed did not save lehman brothers. it went under. they knew it would have some ripple effects. turn that to be a tsunami. they did not have to save merrill lynch because the married it to bank of america, much of bank of america's letter regret. in the wake of that, in the wake of a run on the money market funds that was just in bats as severe as anything we saw in the 30's, they decide to save which has become a giant money sink with your money, but at that point having let or maybe been forced to lead lehman brothers go under, bernanke and tops a new mantra, and that is liver takes. and from that point on he sees himself as the only thing that stands between us and the calamity of the depression. they lend tons of money to a angie come 85 billion. he helps convince paulson to get the congress to get 700 billion to prop up the banking system. they guarantee money market funds. they guarantee the debt of almost every financial institution in the country. they launched the whatever it takes campaign that with the benef