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market plummets and we have three major spikes on the scruff the first one came right after after lehman brothers that was right there and we'll get to that in a minute we also have this one right here and this was during the flash crash when the dow dropped more than a thousand points in a matter of minutes and this was exacerbated by high frequency trading now the third one was right here and this one was during the debt ceiling debate of two thousand and eleven now in all of these events there is a lot of uncertainty and there's a lot of fear and that drove implied or expected volatility as well as realized volatility up while the market drops now let's take a closer look at what happened during a volatility during the lehman bankruptcy and we can see in the in the next graph that of the vix futures and this is from current time to eight months out and let me get this cleared. from current months out we can see this yellow line which started in september of two thousand and eight right after the lehman brothers collapse and initial volatility was fairly high but it was expected by eig

we saw lehman brothers fail to the it was by comparison of the banks we had today. to answer the question, no pity that there was this effort that the banks would tell you resulted in the tripling of the capitol requirements triet my favorite line on the triple of the capitol requirements the like to see how much bigger it is on the attraction is the previous requirement for ridiculously low. trouble almost nothing it doesn't give you a very large number. so it was 2% of something called the rest asset that is more a bunch of them and now is between four and a half to seven. the numbers don't begin to have a number of digits. the next stop that is new is 3%. you do not find any healthy corporation or industry that is another reason the banks need to live like that if they did what warren buffett does, they could retain their earnings and start building up their equity. >> what do you mean? >> if you take a second mortgage on your house, duty pledge your equity on the house. if you keep investing in your house value goes up and you do not take any money out, as a cor

we solve lehman brothers failed that was small in comparison to the banks today. there was an effort that the banks will tell you resulted in the tripling its capital requirements. my favorite line on the tripling of the capitol requirements the always like to see how much bigger it is than the last time infraction is that they are so low as martin said troubling almost nothing doesn't give you a very large number. so 2% of something which isn't even all of the assets. now it's between 4.5 and seven. these numbers don't have the right number of digits and the backstop that's new is 3%. you do not find any healthy corporation or industry and there is no reason the banks need to live like that. if they did with warren buffett does they could start building up their equity. >> what do you mean? >> i mean if you take a second mortgage on your house you delete your equity on the house. if you keep investing in your house value goes up and you do not take any money out as a corporation if you maintain all of your earnings, then you build up your equity. they do not borr

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

so with that lehman. >> president torres and members of the commissioner, good evening, my name is lehman abrams and i work in the area of communications. and per your request we have responded by providing a history of the sewer system improvement program, as well as timeline of the digesters, which is now available on our website. and the public can find it at the sipp -- history at the sipp and there is a ling that lings you to the timeline and if i can switch you to the computer, i can walk you through it. the digestor facility timeline is available at the sfpuc website and we have identified major categories and key activities, which constitutes the major milestones since the plant first came on operation in 1952. i can highlight some of the activities that occurred during that time. for example, in 1996. the clean water enterprise was transfered to the sfpuc, in 1998, san francisco voters approved proposition h. and as a result, there whereas no increase in sewer charges for an eight-year period beginning in 1996 through 2003-2004. the wastewater k-12 improvement project was removed

unfortunately, the economy has not really recovered five years after lehman, and as somebody who hasfor three decades to try to privatize fannie and freddie, and i have when i was in the government and now, i still would not necessarily take a big move right now. >> but you know what you can do, larry? what they should do i dow is widen the fees that the government is taking. >> thanks very much. >>> the supreme court made a key decision affecting free markets today. it's all about big pharma, again rings and something called pay to delay. that's next up on "the kudlow report." [ male announcer ] with free package pickup from the united states postal service a small design firm can ship like a big business. just go online to pay, print and have your packages picked up for free. we'll do the rest. ♪ honey... it's time to go. no. honey, it's too perfect. over a quarter million properties... you'll never want to leave. booking.com booking.yeah >>> all right. supreme court ruled today that the ftc can keep challenging something called pay to delay. those are deals between pharmaceutical

as a former lehman guy, any chance of a lee lehman-like devra davis luges in china taking place?you need large capital markets for that, and we're -- china's along way away from a large fix incomed market. david: great to see you, thank you very much. chinese stocks plummeted as worry over the liquidity crunch in the financial market shook the markets. what is ahead for the world's second largest economy? could that mean buying opportunities have emerged? liz: investors jumping, some of china's favorite metals today. i mean, look at copper. what a day. we have the selloff in the country intensifying. is this the start of the commodity crumble or opportunity to dip in and get silver for under $20? why not? ♪ >> did is time to look at the day's other stories but first of ftc is investigating google's purchase. the ftc review we give it will reduce market choice. citigroup set to become the first american bank to open an office of its own in baghdad. the representative office marks the first countries operation in six years and twinkies will be back on store shelves july 15 and it i

then lehman brothers went down. you know, so who else is out there with the assets that we don't know about because the financial statements aren't doing a good job on that. >> speaking about the disclosure, there's been some testimony reports that show that the markets are more dark or less disclosed since dodd-frank but they are really not going on the exchanges, so this is not the best way of an exchange where you know it's happening. >> the public traded companies and financial institutions in particular have to make publicly available. i think on the market reading it is another problem and that accelerates the volatility. who is trading with and what the market is. it is quite volatile so that does exacerbate the problem as well. >> my time is expired. >> the time of the gentlelady is expired and recognize this the chair of the market's committee the gentleman from new jersey. >> thanks. just to follow along the lines, who exactly is regarded to be unveiled in the situation under the title who exactly is being

brothers and of course window dressing was involved here we know the window dressing story of lehman brothers repo one hundred five moving things around on the balance sheet in order to make things look better there and it anglo-irish they were doing was allowing loans to be issued to executives fitzpatrick and his cohorts who are now. hopefully going to go to trial for their crimes but they were lending to the executives and then paying them back at the at the quarter ends lending again paying it back lending again paying it back in order to try to take advantage of the situation and in addition. you know basically punch a hole in banks' balance sheet by a lot of risky lending that the taxpayers in ireland and it up paying for and the e.u. ended up paying for with a bailout you know hard to believe they actually nobody over race those tapes earlier really really unbelievable. you know francine i saw a documentary recently recently from the dutch film outfit v. pro talking about where this twenty trillion dollars worth of money is being hidden around the world using various accountin

two thousand and eight during the crisis the reserve primary fine took major losses on trades with lehman brothers it could have maintained the inspector expected one dollar per share price in other words it broke the buck this prompted a run on the firm and subsequently triggered a run on the entire industry money markets are a major source of short term funding for companies and eventually the government stepped in the backstop was no small feat. cells are emerging today about a secretive treasury department program backing nearly q. and a half trillion dollars in money market mutual funds here's the kicker congress never authorized it a lot of. the as he sees planned comes after a year of internal disagreement over how to draft the new rules now earlier this year we asked as you see and our own chairwoman walter about the proposal. we're working very far in internally on putting together a proposal to put it out for comment i would much prefer to see a proposal be put out by the f.c.c. and by the. end it was this proposal that was finally released yesterday so what is in it. as the rul

three months and another twenty five percent in less than six months this has echoes of northern rock lehman brothers and others that came to grief in the west on short term liabilities when the wholesale capital markets froze to explain this to the people when you talk about the hidden debt market i mean this is the shadow banking system that people talk about if you look that up shadow banking system everyone recognizes that the banks off balance sheet liabilities that are equal or exceeding their stated liabilities and if you add the derivatives market on top of that the off balance plan it off planet balance sheet liabilities are over a quadrillion dollars now the reason why people freak out when interest rates. go up even one one hundredth of a point a basis point is because it means that roughly quarter my calculations sixty billion dollars of equity is wiped out in the global derivatives business for everyone one hundred point rise in interest rates although people on the visible banking system will say well my interest rates are not affected that much by one one hundred point move th

you are talking about a lehman moment in china t.tive is they are leading and letting the smaller banks fail, they will draw some kind of a line. >> there will be no winners in any of this. you will have catastrophic failure. it starts with the small banks as you point out, private enterprises will be hurt. eventually, the state enterprises will be hurt as well. eventually, this rolls right up the chain. >> how many chinese will fail before this end? you have these small guys, they will be hurt. >> those are all gone, basically. >> you look at this. there is no reasonable scenario for them to get out of it. investment-led growth which has propelled the chinese economy isn't doing well. they now get 17 cents of output for every dollar of new credit. used to be 83 cents of output in 2007. >> just to put a point on it, the timing of your lehman moment meaning a lemman moment doesn't happen over a year or months. it happens within 48 hours. >> you are talking somewhere between three weeks from now an six months out. sometime in that time

the same thing they let happen with lehman brothers in 2008.ut was taken away and they were allowed to fail. so if people are concerned with right now, it's not necessarily the fact that goldman came out and said that gdp would go to 7.8% next year and, you know, that's not the fact. because if it was, you would see that market rallying right now. it's trading at nine times forward earnings. china is down 25% since january this year. it's not a valuation call. it's a liquidity call, and that's what the market is trying to price in right now. >> harry, you have gotten out of china. when you did do that and how did you do it? what's your big concern here? >> the big concern is their manufacturing was pulling back for several months, maria. they're now in contracted territory on the manufacturing indexes. we saw that earlier in the year. we got out of there in february, march, the markets started to go south. as i said, the market's down 20%, 25%, bear market territory. it's too early to go in there and pick. you know, people keep asking me, harry

come about since lehman, in the 50 years leading up to the lehman bankruptcy, were there were only threee dividend sector yielded more than the ten-year bond. each time was a tremendous opportunity to buy the sector. i think what the market is telling you that the groups already pricing in some degree of rising rates. and it's viewing this 2% ten-year bond yield as largely an abberation. so i think actually, the sector can with stand some higher rates given that we've seen a massive correction and you marry that with the fact that it's already pricing in some degree of higher rates. >> doug, one of your favorite names is center point, how does it trade as 18 times forward estimates is probably one of the most expensive utilities, i get this they're doing the mlp, and everyone is excited. do you think there's value at 18 times forward at this one? >> if you look at my top holdings, they try to marry two themes, above-average dividend growth and they're also names which can catapult, take advantage of the natural gas shale revolution in the united states. you look at a name like center-poi

when you get to the point where you want to trigger this, what it would've done had it involved lehman brothers. .. this is something that we can do a huge amount to avoid and prevent. and you can also hit a system was bloated with subsidies, just about everything that you can think of is good. >> host: and we have been talking with a professor at the graduate school of business at stanford university and co-author of this new book. you are watching book tv on c-span2. >> now in interview from book tv college series. in "culture war?" morris fiorina argues that americans are far less polarized than the public is led to believe by the media and political pundits. he discussed his book for about 15 minutes at the hoover institution on the campus of stanford university. >> stanford professor morris fiorina is the author of this book. several editions have come out. "culture war?: the myth of a polarized america". professor morris fiorina, are we divided into red and blue camps in this country? >> guest: it depends upon who you mean by we. if you mean the people who are very active in poli

two thousand and eight during the crisis the reserve primary fine took major wasis on trades with lehman brothers it could have maintained the inspector expected one dollar per share price in other words it broke the buck this prompted a run on the farm and subsequently it triggered a run on the entire industry money markets are a major source of short term funding for companies and eventually the government stepped in the backstop was no small feat. sales are emerging today about a secretive treasury department program backing nearly q. and a half trillion dollars in money market mutual funds here's the kicker congress never authorized it a lot of. the f.c.c. plan comes after a year of internal disagreement over how to draft the new rules now earlier this year we asked as the sea and her own chairwoman walter about the proposal. we are working very hard internally on putting together a proposal to put it down for comment i would much prefer to see a proposal be put out by the f.c.c. than by the sun. and it was this proposal that was finally released yesterday so what is it well as the r

this week we had the largest spiking currency since lehman on a percentage basis.the banks around the world, they're long a lot of currency risk in a lot of bonds. it sets up a strange dynamic. lastly, the last time we had this type of really sharp currency in bond price volatility was right before long term capital. it sets up those dynamics. >> you mentioned lehman brothers because if we look at the emerging markets that saw the biggest decline also bond funds as well. so when you talk to clients, what do you tell them about what is going on about this ticking time bomb and how you trade around that? >> this isn't a joke but you think about the movie franken stein. there's a scene in the movie where he gets up and attacks the doctor. the side effects of qe manifests themselves around the world. those side effects, the market is starting to play games with. that's what i'm telling clients, with the emerging markets dead qe is forced capital into weak places in the world. and it's really the opt of capitalism. capitalism should put money in strong hands. so we are

liz: larry is one of the smart people at lehman brothers.ngs that other people didn't see. you're waving your arms, saying watch out folks. you see what happened. what about this? we have the spdr utilities, the xlu. as you see, especially in the past couple months it has taken the downturn. >> yeah, it is the volatility. investors in florida, millions of people, are in these investments and they have been in heaven for a long time because rates have been going down. all of sudden the rates get that spike, the problem is is wall street's balance sheets are down 90% from 2007 levels. okay? so in other words, because of dodd-frank, the street is not allowed to really warehouse and hold a lot of securities. so in other words, if investors in florida want out of these etfs, there is not enough buyers on wall vote to provide them liquidity. that is where you could get a elevator shaft drop. a lot of these things that should be safe investments. ashley: you also say, larry there are bad side effects from all this qe. it is making investment strate

failure, stabilize, essentially nationalize those entities, and they were like nine times bigger than lehman brothers. it would have been disastrous if they failed. and then they provided mortgage financing, which kept housing prices from dropping further in a worse crisis. but it never dawned on me that, you know, they were insuring about half, a little bit less than half the mortgages. now the government more than 90%. and how did we get here? we got here because of flawed government policies, overstimulating housing, fannie and freddie are growing zero. as you said, the key is getting the private sector under this. because if the government is setting the prices on your mortgages through a subsidy, what you're going to do is you're going to ultimately get things that it's not market reality, it's not economic reality. and you will get another bubble again in housing. >> so we're setting ourselves up right now then, unless a change is made? >> we should have a plan in place to transition to a time when the private sector can play a much bigger role in terms of financing mortgages. >> let m

raise corporate capital spending to $730 billion a year, that was the level before the lehman brothers collapse in 2008. triple infrastructure exports by 2020. and they also agreed on fiscal policy to have japan's primary balance deficit by fiscal 2015. they aim to create a surplus by 2020 and steadily reduce debts after that. ministers also approved a plan to revise social security costs to aid japan's fiscal consolidation. abe said these fiscal and growth policies outline the path to recovery. he said the real economy is improving in terms of employment, production and consumption. >> translator: it is important to steadily implement these policies without wavering. >> meanwhile, japan's top business leader has called on abe to make good on his promise to carry out the growth strategy and reduce the budget deficit. >> translator: we'd like the government to create an economic environment that will help japanese companies to win global competition. >> he also said he will continue to press the administration to cut corporate taxes and take other pro-business steps. >>> a next generati

not so fast, sois guardon chang, a guest on "squawk box" this morning when asked about a lehman brothers-like scenario gave this time line. >> talking somewhere between three weeks from now and since months out, but somewhere in that time frame china will fail because what you're seeing is the crises becoming bigger and bigger as time goes on. eventually they won't be able to deal with it. >> here owns signs we figure there's enough fear regarding china out there so we won't add to the fear. we'll try to alleviate it for you. here's three reasons why china's pain may be our gape. number one, first of all, this currently scramble to get money of china especially since there's not many regular vehicles for chinese people to manage their risk. so where does that money go? it could come to u.s. equities, same for global money managers who think china is a bit too tenuous right now to invest there. number two, remember that china is the largest foreign holder of u.s. treasuries in a downturn in china's fortunes may mean it will be less aggressive buying in u.s. auctions going forward. three auctio

it's what happened before lehman. that was in the brokerage notes this week. we have to take a little emotion out, talk to people with a longer term perspective. they will tell you the economy is looking better. the fed can exit, and they're there in case we have a wobble. and the taper is not tightening, as ben bernanke tried to point out. they're not stepping on the brake, they're just taking their foot off the gas. >> there is an effective tightening, a minor tightening taking place, of course. this is where we have to distinguish between if you like the big picture which maggie was talking about where the economy is moving and we should be pleased. but there is a highly technical point, of course, that as accommodation or as tapering takes place, bond deals will rise. that requires investors to start thinking about where they're going to put the money. if bond deals are rising, mortgages will rise and collerns will rise. >> you want to take that excess out. there are bubbles forming and the fed wants to stop that. >> but that is a de facto tightening, and

it's payback time: lehman brothers is paying back the last of its former instititional customers following the firm's collapse in 2008. they will get 100% of their money back. $92 billion was already paid out to some retail investors back in 2008. americans are still falling short of a comfortable retirement. mike sante of interest.com says many seniors are still straying from a traditional plan. "if you go to any financial advisor and ask for their help in getting ready for retirement, they will tell you what you need to do is get 70% of your pre-retirement income after you're retired. it can be from any sources - social security, savings, pensions - but that what is estimated you need to have a safe and comfortable retirement." sante finds americans in 48 states admitted to not putting away enough. seniors in nevada and hawaii were the most likely to hit their retirement goal. sante says a common error in planning for retirement is underestimating how much your current budget allows you to save. older americans are the most likely to lose money in lottery scams, according to a new survey

lehman brothers had celebrated its 150th anniversary and in 2001, mark zuckerberg was captain of his high-school fencing team. borders bookstores had $3 billion in annual revenue and meanwhile, kindle something you did to a fire and nook was merely a small corner of the room. most americans knew little about osama bin laden or al qaeda. at the time, i was u.s. attorney in san francisco and i myself being out here paid little attention to those terrorist attacks that were occurring overseas. today, our world can change in the blink of an eye. the effects of that change are felt more rapidly and more broadly than ever before. consider the current economic climate. when companies fail to recognize and adapt to change, they can go out of business almost overnight. law enforcement and the intelligence community face a similar challenge. if we in the fbi failed to recognize how the world is changing, the consequences can be devastating. lives can be lost. our national security can be threatened, and the balance of power can tip toward our adversaries. terrorism, espionage, and cyber attack

>> well, i think part of the problem was the government bailed out everyone but lehman.s to work the firms back into health and pay the government back. so it was not politically popular for the department of justice to criminally go after financial executives as a matter of policy because for the most part we needed them to be restored to health. >> and sherron -- i'm sorry, go ahead. >> well, there's a sense i think throughout the country of injustice because those executives have ridden off into the sunset with tons of money, yet rank and file employees were left with nothing, and skilling still has enough money to keep legally battling the department of justice. that's why he gets his day in court today. so there's a sense of rank and file guy, the ordinary american, that rigged game that the conference board ceo talked about in your earlier segment that still exists today. >> yeah. i mean, he will sacrifice $45 million, sherron, as you know so well and drop the litigation but i think the broader point you're making a well taken. thank you for joining us. sherron wat

and he was fast tracking that strategy just before the lehman crisis took hold two weeks before lehmanessentially. now they've backtracked and says he needs to see a eurozone recovery before joining the euro. where do you stand? should poland join the euro? >> that's correct. just before lehman was going to be bankrupt, he said we will join euro in 2011. we do not think -- >> 2012? >> we might go back to that and double-check. i think he said we will be able to in 2011 and we will be admitted in 2012. but anyway, we do not think it's a sound idea, actually. and the fact that we kept our currency was kind of a buffer for the experts. the currency evaluated a bit and we were able to maintain the exports. >> i'm so sorry, very briefly, should poland join the euro, yes or no? >> not within the foreseeable future, definitely not. >> thank you so, so much. we appreciate it. thank you very much, mp from the law and justice party. ross, back to you in london. >> louisa, great stuff. thank you very much, indeed, for that. >>> disappointment amongst analyst and investors. at the cb seems to have

ahead of our recession, before we saw things like lehman and bear stearns go under. so definitely a lot of concern there. people are buying protection after they have experienced some upside, and that's the type of thing you see before maybe we do get another leg higher. they come in and buy protection. - so it sounds like a "buy on the dip if you see the opportunity" play. - yes. - all right, good to have you on. thanks james. - thank you. it's time for us to jump out of here for today. coming up next week, how to get into "financial shape" to own a fitness franchse. from all of us at first business, thank you for watching this week. we invite you back for more on monday. until then, enjoy your weekend. ♪ >> now a paid presentation for meaningful beauty advanced by cindy crawford. >> with special appearances by debra messing. >> valerie bertinelli. >> christa miller. >> and stars from tv's royal pains and the mentalist. >> hosted by network tv correspondent katrina szish. >> brought to you by guthy-renker. >> hi, everyone, i'm beauty and style journalist katrina szi

lehman brothers had 3,300 legal entities here and abroad when it failed.itigroup set up numerous structured investment vehicles overseas, to move positions off of its balance sheet. but when those investments were about to fail, citigroup and the u.s. assumed the huge debt and was ultimately bailed out by u.s. taxpayers. the notion that we should let big banks evade dodd-frank oversight, if they set up a subsidiary in another major economy first, is absurd. a vote for this bill is a vote for more risky derivatives transactions, more bad behavior, more bailouts. i urge my colleagues to stand up for the american people, the american taxpayers, and vote this down. the speaker pro tempore: the gentleman from texas. mr. hensarling: reserve. the speaker pro tempore: the gentleman reserves. the gentlelady from california. ms. waters: i yield to the gentleman from massachusetts an additional minute. the speaker pro tempore: the gentleman from massachusetts is recognized for one minute. mr. capuano: thank you. what this bill says is if you do this activity, in the

so, we have many options that we're talking to virginia about, and we lehman brothers making an announcement in the next few days about the best way to proceed in a manner that's consistent with her wishes. so, to her many fans and her close to 6,000 followers on twitter, we are doing everything we can to make sure that the tamale lady stays in business. since the media broke this story, our office has received hundreds, hundreds of calls and e-mails from people wanting to know how they can help the tamale lady. so, today i want to encourage people to attend an event that is taking place this friday in district 6 at the san francisco eagle, which is located at 3 98 12th street and it's an event to celebrate the tamale lady's 60th birthday. the celebration will begin at 7:00 p.m. at the san francisco eagle, and not only can you wish her a happy birthday, but you can donate a little money to help virginia to ensure that she continues to have a business here in san francisco. thank you. the rest i submit. >> thank you, supervisor campos. supervisor chiu. >> thank you. colleagues, i have two ite

>> no, it's not a lehman moment.instilling discipline in the system and they're making pain be felt, but the interesting thing here is that everyone thinks this tightening thing happened overnight. it hasn't. it's been there for three months. we've actually been tracking it for six months. one of the things that china beige book does is tracks what bankers are saying and what firms are saying on the ground. and it's been very interesting to watch firms, despite this talk of abundant liquidity in the marketplace, talk about higher interest rates paid. there's been declines of lending each and every quarter for three quarters, so, we've been seeing tightening since the end of last year. this is not a spur of the moment decision by the central bank. >> jim goldman -- >> exacerbated because of what's happened here because of bernanke, do you think that added to it? >> sure, qe tapering, tax payment holiday, public holiday, things like that. >> you made a comment that you don't believe any of the numbers coming out of chi