monitoring lehman brothers during this time? >> they were on premises. ehman people daily. they officed there. >> more of lehman brothers ahead when 60 minutes on cnbc returns. [ticking] ♪ [ male announcer ] this is the story of the little room over the pizza place at 315 chestnut street. the modest first floor bedroom in tallinn, estonia and the dusty basement at 1406 35th street. it is the story of the old dining room table at 25th and hoffman avenue. the southbound bus barreling down i-95. ...and the second floor above the strip mall at roble and el camino. ♪ this magic moment it is the story of where every great idea begins. ♪ so different and so new where those with endless vision and an equal amount of audaciousness believed they had the power to do more. time and time again. ♪ and then, it happened at dell, we're honored to be part of some of the world's great stories. stories that began much the same way ours did. in a little dorm room -- # 2713. ♪ this magic moment ♪ [ticking] >> anton valukas says ernst and young was legally bound to make sure t

and accounting statements i started our interview by asking her how a large institution like lehman brothers imploded without any of its auditors raising alarms check it out. really beyond me i'm still mystified and we still don't know why none of the auditors gave us the warning of possible problems at lehman brothers or any of the other banks in particular that failed or had to be forcibly nationalized store acquired during the crisis and your opinion was accounting fraud a factor in lehman brothers downfall. absolutely. the problem with the discussions around lehman brothers was that they focused on whether or not the accounting for the repurchase contracts the repo transactions were technically ok for accounting purposes but they really didn't focus on and no one ended up prosecuting where the disclosure violations they just weren't disclosed to investors so no one has been prosecuted for of the lapses that lehman . none of the executives were prosecuted by the f.c.c. your department of justice ernst and young was sued ernst and young the auditor was sued and recently settled of private

after the financial crisis and most acute phase following the demise of lehman brothers in october of two thousand and eight two thousand and eight scuse me central banks around the world led by the u.s. fed began a program of quantitative easing now here we are whereby a central bank buys private sector assets with newly printed reserve money is said to have helped overcome the financial crisis now the question is at what cost was this overcome our next guest writer and blogger gonzalo lira believes that the cost of ultra easy monetary policy is quite high and could be the demise of the us dollar and two thousand and ten he laid out a hyperinflation scenario for the us that was one of the most talked about post on the blog zero hedge i asked him whether this was a base case or outlier scenario. i think it's the devil and the dollar where the reserve a spending problem getting its. quantitative easing and certain that is your interest rate policy now the problem is that they're going to inject you with zero interest rates up until two thousand and fifteen late two thousand and fifteen

after the financial crisis and most acute phase following the demise of lehman brothers in october of two thousand and eight two thousand and eight scuse me central banks around the world led by the u.s. fed began a program of quantitative easing now here we are whereby a central bank buys private sector assets with newly printed reserve money is said to have helped overcome the financial crisis now the question is at what cost was this overcome our next guest writer and blogger gonzalo lira believes that the cost of ultra easy monetary policy is quite high and could be the demise of the us dollar and two thousand and ten he laid out a hyperinflation scenario for the us that was one of the most talked about post on the blog zero hedge i asked him whether this was a base case or outlier scenario. i think it's the devil and the dollar the federal reserve has been problem getting it so. she's watched and served but is zero interest rate policy now the problem is that they're going to engineer with your interest rates up until two thousand and fifteen late two thousand and fifteen at the

what happened to the bear stearns and lehman brothers businesses they all were sucked up by the remaining banks where there was j.p. morgan and wells fargo took a big piece of those biz. this is and they become too big to fail the way this was engineer is that they're all technically insolvent but they have to put in you know seventy billion pounds worth of of garbage that they have to keep on their books listed officially according to kate p.m.g. they're worth one hundred cents on the dollar even though they're technically worth zero but they became the trash receptacle for the two thousand and eight two thousand and nine period it's in london it's the biggest bank in london london is the global center of financial fraud so h.s.b.c. bank is like j.p. morgan's balance sheet in america they have trillions of dollars of the toxic debt they share with the fed here h.s.b.c. shares toxic dead with mark carney's bank of england so there are warehousing toxic debt now the forensic people days are saying oh my god that's toxic debt this bank is insolvent technically as it has been for five years

. >> the bad home loans caught up with wid wall street, bringing lehman brothers to its knees, and the shock went through the financial it system. credit markets seesed. and investors and stocks plummeting. bernanke on the great depression harnessed the federal reserve to arrest the free fall, slashing interest rates to historic lows, pumping liquidity into markets. and multibillion-dollar bailouts. >> he peace he faced the biggess in generations. >> he got together with fred paulson to pass the asset relief program. >>> action by the congress is needed to avert the situation for financial markets and the economy. >> in december of 2008, with the economy contracting at an alarming rate, bernanke launched the most audacious experiment in history. qe pumped money into the economy by buying treasuries and mortgaging back securities from banks. >> the fed launched it with the idea of stabilizing wall street and hopefully incentivizing new lending by wall street. >> the fed set out to buy more than $1 trillion worth of bonds in the first 12 months of qe. by the middle of 2009, the nation wa

post-crash bestseller, after the music stopped, even blinder takes bernanke to task for letting lehman brothers fail, freezing credit worldwide. that lowers the grade from a straight a or a+. >> the lehman episode just sticks in my craw, not to save lehman or put them to bed in a more gentle way, this is a joint mistake of ben bernanke and hank paulson, who was secretary of the treasury, but it was very consequential. i mean as you know, all hell broke loose the very next day. >> reporter: but at a town hall in 2009, bernanke told jim lehrer that the fed didn't have the legal authority to intervene in an investment bank like lehman. >> in the case of lehman brothers, there was just a huge $40, $50 billion hole that we had no way to fill and no money, no authorization, no way to do it, so we had to let it fail. we had no choice. >> reporter: to blinder, though, the government made up all sorts of tools during the crash. >> guess what? they had the legal authority to save the money market mutual funds by using something called the exchange stabilization fund, which is supposed to be to support th

system with some of the world's largest banks coming to the brink of collapse now in the case of lehman brothers the institution did in fact collapse and in the aftermath. of lehman's demise our largest financial institutions were bailed out not just here in the us but globally as well however many questions still remain about the methods used to prop up these institutions our guest eve smith author of the book and founder of the very popular financial blog naked capitalism is still on the case she's joining us now and probing into the conspiracies of governments dealing with the too big to fail institutions eve welcome to the show thank you so so so much for being here now i'm going to ask you right off the bat you're a former banker you were with goldman sachs in a lot. of the big boy goldman sachs how did you become one of wall street's leading critics given the lifestyle that you started out in. well as i like to joke goldman was a was i was on wall street in the days when it was only criminal around the margins . you know after goldman i consulted to the industry for quite a few years in ma

system where some of the world's largest banks coming to the brink of collapse now in the case of lehman brothers the institution did in fact collapse and in the aftermath. of lehman's demise our largest financial institutions were bailed out not just here in the us but globally as well however many questions still remain about the methods used to prop up these institutions our guest eve smith author of the book and founder of the very popular financial blog naked capitalism is still on the case she's joining us now and probing into the conspiracies of government's dealings with the too big to fail institutions eve welcome to the show thank you so so so much for being here now i'm going to ask you right off the bat you're a former banker you were with goldman sachs in a lot. of the big boy goldman sachs how did you become one of wall street's leading critics given the lifestyle that you started out in. well as i like to joke goldman was was i was on wall street in the days when it was only criminal around the margins. you know after goldman i consulted to the industry for quite a few years in man

morgan goldman sachs lehman brothers before it went down you know this is the too big to fail forget the fact that there's thousands or hundreds of other banks that could have survived the system well here we look at the next headline interest rate rise would make more people better off poll finds it could help david cameron to stay in downing street some thirty one percent of those questioned by you gov for that time said that a rise in interest rates would leave them personally better off against twenty three percent who said they would be better off with lower rates and thirty two percent who thought it wouldn't make any difference either way so we have more people who said they would do better personally then those who say they're in perilous day and need interest rates to stay at these low levels well this is the dirty little secret is that because. the numbers i've looked at recently say about one hundred fifty billion pounds a year on mortgage. expense with these low rates you lose three hundred billion dollars a year in interest income on pensions and savings account at banks

morgan goldman sachs lehman brothers before it went down you know this is the too big to fail forget the fact that there's thousands or hundreds of other banks that could have survived the system well here we look at the next headline interest rate rise would make more people better off poll finds it could help david cameron to stay in downing street some thirty one percent of those questioned by you gov for that time said that a rise in interest rates would leave them personally better off against twenty three percent who said they would be better off with lower rates and thirty two percent who thought it wouldn't make any difference either way so we have more people who said they would do better personally then those who say they're in perilous debt and need interest rates to stay at these low levels well this is the dirty little secret is that because. the numbers i've looked at recently you save one hundred fifty billion pounds a year on mortgage. expense with these low rates you lose three hundred billion dollars a year in interest income on pensions and savings account at banks

in our report we do a case study of when americans did the same thing for lehman brothers in 1994. urned out successful partly because we had good tailwinds in financial services. 1998, ityou look at was the one-year lehman shares went down because it was the russian prices. american express's went up. that was what america -- american express wants to do. leave the wealth management to ubs and you understand the logic behind the argument we are making. >> what would they do with the investment bank? would it be on the market listed as something else or would they sell it off? think there is a market for an investment bank at the moment. -- price wouldn't be american express realized this. they try to sell lehman brothers two years earlier. what happens is the shareholder has now got one share in what we call the investment bank and one share in the new ubs. it is up to us what we do with those shares. we have the investment banking business earning about a 14.5% return on tangible in 2013. the magic of it, it will have no legacy assets. you mentioned goldman sachs, morgan stanley a

morgan goldman sachs lehman brothers before it went down you know this is the too big to fail forget the fact that there's thousands or hundreds of other banks that could have survived the system well here we look at the next headline interest rate rise would make more people better off poll finds it could help david cameron to stay in downing street some thirty one percent of those questioned by you gov for that the time said that a rise in interest rates would leave them personally better off against twenty three percent who said they would be better off with lower rates and thirty two percent who thought it wouldn't make any difference either way so we have more people who said they would do better personally then those who say they're in perilous debt and need interest rates to stay at these low levels well this is the dirty little secret is that because. the numbers i've looked at recently save one hundred fifty billion pounds a year on mortgage. expense with these low rates you lose three hundred billion dollars a year in interest income on pensions and savings account at banks

here in washington dc asked me to explain to his audience on his blog what happened with the lehman brothers. and so i wrote a commentary. fifty people responded to the commentary. to me, that was indicative of the appetite and the demand for explaining to us what is going on on wall street. so i wrote some more commentaries and i got a number of responses when i realized that if i really want credibility as a writer, i need to put my name out there. i cannot just be ld or another pseudonym. if i really want the readers to say that i believe in this individual, i need to put my name out there. so i did. i introduced myself to bloggers and said this is who i am. this is my background. really what motivated me at that point was this whole idea that i could be of service. this idea that i have a body of knowledge about the shadow banking system, the technicals in the market. the fact that this securitized market that i was in represented between 20 and 45% of the credit that flowed into the economy. that is meaningful. and the fact that those markets to a very large extent shut down in 2008. an

[ticking] >> anton valukas was the man in charge of investigating the collapse of lehman brothers, the

it finally popped with the bankruptcy of lehman brothers and the near collapse of a.i.g., who were both heavily invested in the oil markets. with hedge funds and investment houses facing margin calls, the speculators headed for the exits. >> from july 15th until the end of november, roughly $70 billion came out of commodities futures from these index funds. in fact, gasoline demand went down by roughly 5% over that same period of time. yet the price of crude oil dropped more than $100 a barrel. it dropped 75%. >> how do you explain it? >> by looking at investors. that's the only way you can explain it. >> in july 2010, president obama signed the dod-frank act. it addresses many of the regulatory lapses in the commodities market. among other things, it limits the amount of commodity futures that speculators can hold. it makes it easier for the commodities future trading commission to investigate suspected market manipulation, and it empowers the agency to regulate energy derivatives, which enron used to drive up the price of electricity in california. [ticking] coming up, a herculean eff

we've been through the financial crisis, lehman brothers and bear stearns no longer exists. general motors has been through bankruptcy and back up again. the nasdaq is up 70%. i turn it over to guy adami. one of the last original traders from that first broadcast to be here on this desk. >> what we set out to do way back when, what do traders do when the trading day is over? what do they talk about? and we try to level the playing field for folks. and i think in a sense we did it. we were the beneficiary of crazy times. and the markets were dicey. that's where we got our sea legs. it's been a great show. thanks to the folks at home for watching. >> there's some lessons we picked up that we tried to educate our viewers on. >> thanks for reminding me of some of those. for me, one of the black swan idea. the absolute worst underperformance month we ever had was september of 2008, when seemingly, out of nowhere, they banned the short selling of financials. if you had a portfolio that included short financials, stocks opened the next morning. many 100%. that's an unbelievably pai

. >>> and why former lehman brother ceo brad hintz says not to worry about the numbers so far. so ally bank has a raise your rate cd that won't trap me in a rate. that's correct. cause i'm really nervous about getting trapped. why's that? uh, mark? go get help! i have my reasons. look, you don't have to feel trapped with our raise your rate cd. if our rate on this cd goes up, yours can too. oh that sounds nice. don't feel trapped with the ally raise your rate cd. ally bank. your money needs an ally. ♪ ♪ [ male announcer ] eenie. meenie. miney. go. ♪ ♪ ♪ more adventures await in the lexus lx. dare to be spontaneous. in today's market, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price, maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity acc

and lehman brothers crisis, 2010 was essentially the year of greece. 2011 the e.u.will be the year that emerging market central bankers need to step up and prove their credibility. turkey and south africa did it wrong according to these guys on wall street. what they are saying they should have done is this. tell the markets, get out in front of a rate hike. saying you will defend their currencies. then peg the currency to benchmarks like the euro or dollar, even basket of currencies. the next step they're saying set up perhaps your own currency bloc with neighboring countries and then raise interest rates. in other words if you raise rates without doing those two things, i would say the first two things it is lost in the markets. you will not get the impact and the bang for your currency buck that you expected. back to you guys. david: that is how george soros made a billion bucks in europe with the english pound. they tried to raise rates in order to stablize the currency. they didn't. it went down and george soros made a mint. >> that is such a great point you ma

lehman brothers is the clearest example.is the culture has never changed, given that there is not enough human teacher recognition. tweet and lete a me know your thoughts as to whether or not the culture is still rampant. they were at firms that got kicked out of the industry. what is amazing to me send theseis very slow to stop types of problems. >> why? this is a self-regulatory body. the sec.ot this is not the real regulator in the sense the primary mission is to protect investors. self-ou have an inventory regulating a big chunk of the industry, it has to be bigger than the industry. they are small fines when people do get them. we do not have the same level of enforcement that i think you would get if we had government in control. >> earlier you brought this up, a term you were talking about. you said there is cockroach going on in the industry. walk us through that. firms, a bunch of lynch had gone down. storywas a fantastic about it where they profile it. they profile -- profile of tele that is the moment 10 firms in

morgan goldman sachs lehman brothers before it went down you know this is the too big to fail forget the fact that there's thousands or hundreds of other banks that could have survived the system well here we look at the next headline interest rate rise would make more people better off poll finds it could help david cameron to stay in downing street some thirty one percent of those questioned by you gov for that time said that a rise in interest rates would leave them personally better off against twenty three percent who said they would be better off with lower rates and thirty two percent who thought it wouldn't make any difference either way so we have more people who said they would do better personally then those who say they're in perilous debt and need interest rates to stay at these low levels well this is the dirty little secret is that because. the numbers i've looked at recently save one hundred fifty billion pounds a year on mortgage. expense with these low rates you lose three hundred billion dollars a year in interest income on pensions and savings account at banks so

lehman brothers is working out deals from the bankruptcy, the former company has reached a settlementie mae $500 million. fannie says it bought $2 billion bad mortgages from lehman and a judge must approve and the bankruptcy was the biggest in u.s. history. south korean samsung said profits declined for the first time in two years and the company made nearly $7 billion in the last three months but down 11% from the previous quarter and blames the cost to promote galaxy. the mars rover was planned as a three-month exploration but turned into a decade-long mission and what it's teaching us about the mysterious planet. >> and schools are closed in the deep south as freezing rain and snow has made it in the direction, i will have your national forecast. >> the sun is rising over the capitol building in washington d.c., this is a live look this friday morning. >> i'm phil torres, ♪ i'm phil torres, welcome back to al jazeera america, just ahead celebrating ten years on mars and nasa rover is making amazing discoveries but let's look at the weather on this planet and metrologist nicole mitc

when i started, i came from lehman brothers. one of the interesting things was that this was an adjusting company. it looks like nobody stabs you in the back. they said, you're right. at our firm, we walk up to somebody and stab them in the front. i was sort of horrified. i would rather be punched in the face then stabbed in the back. >> it ended up being the case. one oyster to blackstone, we only wanted to hire nice people. set up a meritocracy, nonpolitical. about pretty ruthless making sure that those are the people who work at the firm. >> blackstone, ruthless nice guys. >> thank you very much. steve schwarzman is the founder of blackstone group. here with us in switzerland. will speakack, we with the ceo of coca-cola. we will also talk about herbalife. shares are plunging. bill ackman could be dancing in the streets in new york. we will have that in a few. ♪ >> you are watching "market makers." breaking news on herbalife. the shares are plunging. fromis after the senator massachusetts released a letter saying that he is ca

today you can buy a lehman brothers sweatshirt for 295 dollars. >> i am going to give you an actual cellt took place a few years ago. a boutique broker-dealer went to auction and bought bernie madoff slippers.mmed >> i would have bought them. >> how much to think they went for? eight grand. he made a ton of money. likes in 2008 a used bear stearns t-shirt sold for 100 and one dollars on ebay. >> i would rather go with the slippers. we're going to be back with more on extending benefits. ♪ withis is "market makers" erik schatzker and stephanie rowe. expecting laste year stocks to continue, this has been a disappointment. fear not. our next guest says the new times are going to continue for equities. it is good to see you. in some respect, you are even more bullish than you were at the onset of last year. >> i am. how can you not be after a year like that? >> most people would not agree with you. upy would say the s&p 500 is almost 30%. how could i be more bullish? still all about the fundamentals and what central banks are doing. there's nothing on the horizon to me that suggest accommoda

as aggressively, the last time we saw mortgage theovals at this level, lehman brothers were still doingtures, we will find out theher gdp has delivered as market expected. this growth on a structures on a strongs growth trajectory, vindicating what the fomc has done? up. equity futures, s&p 500 .25%, 1776. lloyd blankfein said do not be surprised if you see a correction in these markets, you're coming off record highs. indicating autures little higher. still, the emerging markets story dominates the agenda. it will dominate the discussions out there. iss is a fast money, which flowing out of the emerging markets. ee intothe rand and rup the dollar. that is the general consensus. my line of the day, phrase of the day, comes from an interview economics.s rout iserging markets the subprime crisis of 2014. >> tom keene joins us from new york with a preview of "surveillance." front and center this morning. and thethe fed decision, you see the reaction in the emerging markets. the idea of the immediacy of the crisis in the emerging markets. robert will join us from pierpont securities. for ye

onryone would have been lehman brothers and bear stearns. >> they own their headquarters. 3000 fromastut us. jason took it over and you have to factor that into the number. sit there and risk it on the spreadsheet and say it has a 6% likelihood of going up? >> want small tenants, big tenants, technology tenants -- you don't have that much choice always but you want to spread different types of tenants around. >> you develop your projects here in new york. but given this transfer of wealth from here to san have you thought about developing out there? >> san francisco is a hard market to get into. does developompany their but new york is growing like crazy in the technology area. brooklyn is growing like crazy. , after sanming francisco, we are number two and it's growing rapidly. more software and media. everything rum advertising on tv -- look how old-fashioned i am. very big here. >> you feel like you are getting the when question are >> definitely. maker bot is a maker of 3-d renters stop they just got bought by somebody, so it's a huge part in downtown brooklyn. >> we are talking su

ef hutton was one of the great firms, too. >> yes. >> i ended up at ef hutton because lehman brothersand stiles were great. >> it was fun. >> applegate was great, too. >> back in the 1930s it was fun. >> it's his birthday today. >> i know that. i was going to order a stripper but i guess you can't do that anymore. >> we learned that in the 6:00 hour. >> i saw the policeman over there. >>> coming up next, is the empire state about to loosen up its marijuana laws? that's coming up next. at the bottom of the hour, the top global risk for 2014. i don't think they involve weed but they might. will u.s. relations with russia disrupt the markets in the new year or will it be china's economy? we have that answer when "squawk box" returns. [ male announcer ] this is the story of the little room over the pizza place on chestnut street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i-95. ♪ this magic moment it is the story of where every great idea begins. and of those who believed they had the power to do more. dell is honored to be part of some of the

that is more or less the outset of the financial crisis, long before lehman brothers went bankrupt orstearns was bailed out i the fed. to, thewhat it comes justifications the bank boards give for ceo and executive compensation. this 2 million dollar option award was given to him "to further motivate the executives to focus on the firm's long-term success by providing greater ownership opportunities and reinforce the partnerships that will help to produce excess. >> why do we have such a fundamental problem with that, was annexed are ordinarily difficult year to run a bank. could they not say that they wanted to pay him that money because that is what it is worth? media executives, hedge fund makers, they make 10 times that. why would you not say that he should make more money? >> my issue has nothing to do with the dollars. that is a separate discussion. people can argue until we are blue in the face about whether they deserve the money or not. it is the deserve art. >> you do not like other boards -- >> justification to further motivate? what further motivation do you need besides th

one of the things that keeps coming back is the last time the big banks that failed in 2008 was lehman brothersa lot of people in government don't want to see that repeated. they don't want to see the chaos that that caused in the u.s. economy and global economy. so you have the real fix that everybody is in. they want to be tough on the banks but at the same time can only be so tough. >> something is not right there. thapgs so much. >>> checking our top stories. won't hit book stands for another six days but a new memoir by robert gates is reverb rating. gates blasts president obama's lack of faith in military leaders and rips joe biden and hillary clinton, two potential candidates in the 2016 presidential race. >>> this morning dennis rodman saying happy birthday to kim jong-un who turned 31. former nba star and team of retired basketball players reportedly lost their exhibition game against the north korea team. rodman has come under fire for his friendship with kim while refusing to help an american imprisoned there. >>> still to come in the "newsroom" it is the winter resort to the stars b

fannie mae and freddie mac in early september 2008 that followed by this very intense time of lehman brothersand aig, i think the very intense time from september 1 until the later part of the year, that was the time of the greatest stress and risk. the combination of the lending programs and injection of government capital, the fiscal thect of that, brought crisis down considerably by the end of the year. into next year we were still working to stabilize the system with stress test tank and the shall i think -- addressing concerns. but i do not think it is fair to something asit as being continuous for a year and a half. rather, there were times of ads and flows. the most intense in september and october, i think we got that under control reasonably quick of theh a combination fed liquidity provision, tarp, fiscal injections and actions by the fdic and other agencies as well. describedulson sleepless nights at that time, agonizing he would go down in history as the herbert hoover of the fsa and -- of the episode. described you as the buddha of central bank. did you have sleepless nights? >>

our government attempted that with the lehman brothers bankruptcy. are we on the same part? >> it is the same dynamic but it is worth in china because this is going to be the first default ever. that really means all these investors have said for the last four, five years no problem, they can chase ultrahigh returns and the government will bail them out. there are too many of these bad companies to bail out. adam: we will be watching that, hope to have you back real soon. >> thank you. adam: you are welcome. lori: that is pretty impressive but you can't make this up. crews are working to patch up a massive sinkhole next to be bailed out automakers office in the renaissance center, which of course is based in detroit. a bankrupt city that has the potential to be another massive sinkhole. the 30-foot deep crater believed to have been caused by a water main break. there have been no injuries and it could take days to even begin to fix it. the government bailed out gm to the tune of $50 billion to taxpayers taking $10 billion loss. adam: the world is awash. any warning and why s

powerful person but don't have much influence over the economy, the euro zone or the collapse of lehman brothers. translatingevents down to the states. they get credit for creating jobs. one of the states that stands the states have come back but the governors are in serious political trouble. in maine, the governor won office with something like 37% of the vote because an independent candidate who captured about 34% of the vote. there was a combative style. they fought with the unions over a mural in the state capital that depicted the contributions of labor to the state of maine. the governor wanted that moved and there was a big brouhaha. he is a very competitive guy. inis trailing significantly the independent and democrat. the governor of pennsylvania is in serious trouble despite the fact that jobs had been created during his tenure. he doesn't deserve a lot of credit for that. ng of here is a sampli local projects approved. states thatist of got the most. alaska -- d.c. nobody wants to talk about federal spending. they lovego home, bragging about spending. they love what the budget did fo

. >> the bad home loans caught up with wall street, bringing lehman brothers to its niece, sending shock the global financial system. investors fled stocks and money markets. with confidence plummeting around the globe, bernanke, an authority on the great depression harnessed the full power of the federal reserve to arrest the freefall, slashing short term interest rates to historic lows, shoring up troubled financial institutions through multi-billion dollars bailout the. in december, 2008, with the economy contracting at an alarming rate, bernanke launched the most and you had days experiment in federal reserve history, a bond buying spree called quantitative easing, buying treasuries and mortgage backed securities from banks using newly created money. by the middle of 2009, the nation was crawling out of recession. in december, he was named time magazine's person of the year. >> more than $3 trillion worth of bond buying later, the economy is slowly but steadily growing, the housing market recovering and the fed winding down its unprecedented stimulus. q.e. has had unintended conseque

the real question is do they have the lehman brothers.ake stuff. that's why it's so cheap at wal-mart. their provincial governments borrowed huge amounts of money, like detroit, insolvent because they borrowed huge amounts of money for projects that don't pay out and so they can't pay off their loans. that could easily crash. if it does, it will ripple through our financial system as well, so the question is how does the federal reserve respond to all this? >> president obama has praised ben bernanke, chairman of the federal reserve. now we've got janet yellen. you predict failures that could set us back. >> she's a very different person. bernanke said i can't bail out general motors. that's industrial policy. she might feel differently about bailing out the insurance companies, or the big companies that get trashed in china. just about every big multi national in the united states, general motors, ge and so forth are heavily invested in china. if that place crashes, they're in trouble. if she starts bailing them out, we're on the road to

the fed has more leverage than the balance sheets of lehman brothers bear stearns freddie or fannie before those institutions essentially failed. jim rickers notes the fed is insolvent. it has wiped out its capital. of course, it carries them and does not mark them down to market but if they did they would be broke. the insolvency of the fed will become a major issue in the years ahead and may necessities thes is tate the bailout by the taxpayers. the once-proud dollar once backed by gold and then the full faith and credit of the world's greatest country is now backed by used car loans and underwater mortgages. but those who trust in paper say hey look, for 50 years now we've had con -- no convertibility and amazing improcess. in productivity and wealth have occurred. perhaps but one might also argue we are living on the borrowed plumage of the past, that our current accept answer of a paper currency rests on the glory of our monetary past. no one can tell for sure what the future holds but i for one am concerned that the panic of 2008 may not have been an anomaly but a harbinger of someth