what's inside the banks. presumably the way capitalism works is that somebody in the chain of value has collateral traditionally the collateral is held by banks but what you're saying and what other people are saying is that there is so much opacity there's so much. what are called black box accounting that there is absolutely no way to determine if there is any collateral whatsoever behind much of the hundred chilean dollar derivatives market or even just the real economy and with moody's and the s. and p. and fitch they're now downgrading sovereign debt the aaa rating of the u.s. debt which is already been downgraded it looks like is going to downgrade it again how does that factor the fact that banks no longer have collateral on their books isn't that part of a growing problem going forward jessica i think that there's a conflation of a couple of issues there's obviously sovereign debt which is a different issue then the inadequacy of either collateral or bank capital now the problem with american accountin

burnished banks what exactly is the taxpayer own british banks r.b.s. and lloyd's toxic derivatives fraud and zero collateral far more disgusting and dangerous than the horsemeat and yet the british economy collapses due to this disgusting fraud pies sold by the city and the taxpayer shrugs their collective shoulders and says gee these mud pies of austerity sure taste great with a little brown sauce and horsemeat tasting yes max so the news here has been just chock a block with this whole horsemeat story and i've never seen so many people interested in this big story and yet the very same week that we have just say nay horse me in burgers who are pfizer u.k. the very same day you see this headline lloyds in r.b.s. need billions more capital bank of england says britain's bailed out banks need billions of pounds more capitals to shore up their balance sheets and support the economy senior bank of england officials have warned u.k. regulators have given royal bank of scotland and lloyds banking group until march to begin dealing with a black hole that broo

the u.s. and u.k. in this bank bailout the u.s. forced all major banks to take state money buying this takes about half their book value and is already out of most of its position the u.k. on the other hand paid roughly twice the rate taking positions in just three of the worst affected banks r.b.s. lloyds and. so they spewed money without taking positions and without therefore possibly profiting for the u.k. taxpayer but again lloyds and r.b.s. these are the two big. you know the worst offenders of the black hole ghostwritten of r.b.s. of course you have the right honorable gordon brown one of the m.p.'s from scotland in the house of commons this past week dribbling on about some constituency and he's the guy who orchestrated this amazing giveaway to terrorism in the city of london well so let's move on to the jewish people of the naked worship and people of the pint of lager in the marmite hear. him v collapse leaves gift cards bought for christmas worthless companies decision not to honor a gift vouchers problems claim of missell

morgan the private banks own the central banks the central banks are not there for the people so the central banks want back all because the people who own the and own the central banks want to go if you think you're getting your gold from the central banks you are fricken nuts you need to get your own gold it's over well the funniest question. that the socialist and christian democrats ask in the netherlands is whether or not the gold bars that london canada and the u.s. are holding for them are actually real they're actually asking if the gold bars are even real but look they look to happen in the u.k. the british government sent that old queen elizabeth into the vaults to say oh ho you know we're going to listen fair little hope you all of a sudden don't want to go all you know that's a big problem get a nightmare you know gold is not safe in britain your goal is not safe anywhere unless it's in your personal vault well that's a very important point you bring up is that the queen of england did visit the bank of england gold vaults and first of all that's a classic come on a little

i think this was an exercise in showing that the government and the bank of japan, the central bank are on the same page. they certainly delivered that. i think the fact that it's an open-ended asset purchase program, it was more than what the markets had been factoring in. i think the dollar/yen moves are sort of moving independently right now. and i think a lot of that has to do with the comments that we had from government saying, oh, we're not trying to manipulate the currency, which throws into question this competitive devaluation story they were banking on. instead of being explicit about that over the last couple of weeks, now they're going to have to be a little bit more implicit about that. but the man of the hour, mr. shiraka shirakawa, the bank of japan, here is what he had to say. >> translator: japan believes growth is important. we teamed up with the dwoft to strengthen our policies and work on this goal together as one. >> let's take a look at the technicals about this 2% inflation target. because at the same time today, the bank of japan is saying the price of fiscal '1

knowing the power of banks to divisors to close the institution, owners and managers of community banks he'd supervisory recommendations against risk. supervisory recommendations against risk. they exert substantial control over the behavior of management, as risk and potential enclosure matter to them. -- risk and potential closure matter to them. they are simple rather than complex in the capital structure. they really have uninsured creditors. market discipline, over management practice, is primarily exerted through that limited number of shareholders. of the three groups shown on this slide, the 70 regional and moderate sized organizations are subject to a broader range of market discipline. like community banks, these institutions are not exempt from the bankruptcy process. they can and do fail. given their size and complexity, the failure resolution and transfer cost as cannot become accomplished over -- transfer process cannot be accomplished over a weekend. uninsured depositors and unsecured creditors are also aware of their unprotected status in the event the institution experi

the u.s. and european central banks, are essentially doing the same thing. implementing drastic monetary easing measures to weaken their currency and to increase exports. >> one of the most important questions is how do you think this policy is going to affect japan's economy? >> well, actually, many economists have been wrestling with that question. at what point prices start to rise, it might be difficult to stop the momentum, but others argue it will take some time for the boj to actually achieve its target. >> it's hard to expect because considering japan economy is suffering negative outward gap at 3% of level and also considering level is still high compared to historical level it's hard to anticipate inflation number bring back to 2% level or close to 2% level. >> we also need to look at possible price hikes in the larger context. right now the economy has been suffering from a condition known as deflationary spiral. companies earn less, so they cut wages. and consumers spend less. that drives down company's sales. now, considerable will happen with t

the rotting banking system doesn't doesn't emit an odor. such so people are not aware that they're walking amongst the dead the british pound is a zombie currency and the british bankers are all necrophiliac loving the zombie bankers and banks and this is what we do we report on it we're on the front lines exactly but i think there is an awful stench we all did smell it in two thousand and seven and two thousand and eight people were panic people scared people that was because of the stench of the banking system but people are used to it now and they just think oh well you know my horsemeat burger and they move on but you know four hundred episodes in to the kaiser report this financial report many of the themes we've been looking at are starting to come true one of them as you mentioned in the opening is currency wars so let's look at this first headline of the past week the big headline save this for episode four hundred this is russia central bank to keep buying gold. the russian central bank will continue to buy gold as it seeks to diver

the rotting banking system doesn't doesn't emit an odor. so people are not aware that they're walking amongst the dead the british pound is a zombie currency and the british bankers are all necrophiliac loving the zombie bankers and banks stirrers and this is what we do we report on it we're on the front lines exactly but i think there is an awful stench we all did smell it in two thousand and seven and two thousand and eight people were panicked people. scared people that was this because of the stench of the banking system but people are used to it now and they just think oh well you know my horsemeat burger and they move on but you know four hundred episodes in to the kaiser report this financial war report many of the themes we've been looking at are starting to come true one of them as you mentioned in the opening is currency wars so let's look at this first headline of the past week the big headline save this for episode four hundred this is russia central bank to keep buying gold. the russian central bank will continue to buy gold as

economy is shrinking why because of scroungers like oz born cameron and the banks. now i might add he's been pretty much alone on the world stage of leaders as introducing austerity and so he's doubled down even cutting his own child benefit despite the fact that this week i.m.f. economist apologized for austerity forecasts so the international monetary fund's chief economist today acknowledged that the fund blew its forecast for greece and other european economies because it did not fully understand how government austerity efforts would undermine economic growth the new and highly technical paper looks again at the issue of fiscal multipliers the impact that a rise or fall in government spending or tax collection has on a country's economic output so max they've been looking at the eurozone and making projections based on a point five multiplier which is a very low multiplier effect of any fiscal policy but what they've discovered is that actually this is only appropriate for a nation with low debt low fraud low amounts of fraud in a stable banking system. it turns

host: how big of a market share did the small banks have compared to some of the big boys? ery small. we are talking about your local banker. there are two kinds of sets of banks. there are community banks and the larger banks and the mortgage underwriters that were feeding this frenzy. host: anthony is next from baltimore. caller: good morning. i have an important question. i did it all right with a conventional mortgage, fha. in 2008, the bottom fell out, i got caught and went under water. now i can i get a refinance and the house is worth nothing. is there anything in the new rules for people like me to get out of this mess that we did not create? what is on the table for us? thank you. guest: these are rules for mortgages to be made going forward. there is nothing in discussion about people in your circumstance, having taken out a mortgage during the mania, paying a price for your home which it is no longer worth and having the loan still out standing and having the house worth less than the loan. many people are in this circumstance. there are discussions about principl

it hurt the bank. it caused a lot of losses. >> if you look back on the crisis, what year would you say? >> it came to a head in late 2000 -- 2008. >> who got hurt? did anybody lose? >> shareholders took losses. they did take dilution of their share. laymen, obviously, they were allowed to go to bankruptcy. that was a failure. smaller banks, the largest banks in our traditional process, their manager lost their jobs, their bondholders took losses. that is the way it is supposed to work. it is a government run bankruptcy. that is supposed happen. when you get in trouble, you and your stakeholders are the ones who are supposed to take the losses, not the government. that is one of the problems of the bailout. those who invest in large institutions, you have to put on the government. if they can take risks, when the risks go up, we will put it back on the taxpayers. that in itself makes the system unstable. not a at the bank's were healthy account of the way it should have been. that is a source of system

with that i then got the american banks online and the european banks online. so there you had the political will to do it. brazil, fernando car dose sew, 1994. the country had been in moratorium, i don't know how many restructurings. and he decided enough is enough as finance myster. and -- minister. and he said we've got to get this debt deal done. we worked on it, got it done. within hours he announced the real plan which took brazil out of hyperinflation, and brazil's had its ups and downs since, but it's a different brazil today than in 1994 with cardoso. and the last example i would give is turkey. when asked of that in 2001, my friend al dervis was called in to be finance minister. and i worked with him on that particular plan because we had to convince the u.s. treasury to support the imf. but he put in reforms, and he told the people of turkey, look, you're going to have to take this austerity for x period of of time, but we will lead you to growth, and he did. look where turkey's come after that. so i just use these three examples; one in the middle ea

the marketswere up. now you think regional banks will do better than the big money center banks. tell us why you think that? >> well, the regional banks have their own set of issues. as you eluded to, the low-interest rate environment is providing huge pressure for net interest margins. however it's very clear that particularly the large regionals, the bank like u.s. bank kopp, bb & t, p&c, phipps, third and wells fargo which i classify as a regional although a very large one, our moving market share. i mean they are seeing the lending volume that is sufficient to offset that net interest income or that net interest margin pressure, so you know i think that they just present a greater source of stability and american banking. bank of america and citigroup will work through their is issues over the next several years but they're to the going to be returning capital to shareholders, i think, at least until 2014. whereas the regional banks are already had their dividends established. they're able to grow them. they really are the stable banks in america right now. >> all right, we ar

the nation's largest banks announced two big settlements today over the housing crisis. 10 of them are settling with federal regulators over allegations they mishandled foreclosures. and in a separate deal, bank of america and government-owned mortgage giant fannie mae settled the score over trillions of dollars worth of bad home loans. in all, the deals cost the banking industry billions of dollars, but as sylvia hall reports, they put to rest some big problems left over from the housing bust. >> reporter: it's an expensive time for bank of america. the company announced today it will pay out billions of dollars in two separate mortgage settlements. the first lays to rest a dispute between fannie mae and countrywide- the troubled mortgage giant bank of america bought in 2008. bank of america will pay $3.5 billion directly to fannie mae. and buy back almost $7 billion worth of bad mortgages that countrywide sold to fannie mae before the housing bust. bank of america will also sell servicing rights on two million mortgages, bringing the total value of the settlement to over $11 billion.

with the royal bank of scotland barclays are lawyers threatening the government banks in america threatening the government and just down the fiscal cliff and the debt ceiling banks threatening the government give us money or require the system it all kind of comes from long term capital management i think what your thoughts are you think you're quite right i mean the too big to fail concept started then i think that was the you know the d.n.a. got into the system about point he was slightly different from what happened two thousand and eight because this joint hedge fund officially was going to be dismantled but what happened what greenspan did by cutting rates or muscles in the lead to save long term capital management because it was wound down its founders lost their money and that was the end of the business but it was really to save the counter parties or the long term capital management which was the likes of j.p. morgan deutsche bank u.b.s. you name the guys in that space so it was the links between this this giant hedge fund the big dealers and over the counter derivatives that they

and the central banks and the people advising george jobs board what they have to say about what what we should do with the economy and yet they totally obviously don't know what they're doing they're just pulling it out of a magic bag of tricks they they don't know and it's a huge wealth transfer and they use the language of economics and finance to bamboozle mainstream media into mouthing their propaganda while they they. demise a whole segment of the population that's being financially exterminated or by using interest rates we're seeing the imposition of what i would call interest rate related apartheid where if you're in the top one percent your cost of borrowing money is you know percent if you're going to want to go for a payday loan you basically have the same rights as a black under apartheid it's financial part time in this country and it's sickening well talk about this wealth consolidation and this wealth transfer high stakes gambling machines suck money from poorest communities m.p.'s express alarm about five billion pounds spent on fixed odds betting term

have you ever heard the wall about the bank is the billions and bars all the chances are you probably haven't but six times a year central bank heads from the u.s. europe asia and everywhere in between representing around three quarters of global economic output gather in the swiss city to talk shop behind closed doors i personally also don't like these secretive meetings because. you never know what in effect. is discussed in these meetings it's something that has a tradition that's put there play i mean bankers have always talked to each other in a more secretive way the whole business of banking is not really built on transparency but rather on trust and confidentiality the continuing global financial crisis has seen the banking sector firmly in the spotlight with more than a few accusing fingers pointed in the direction of bankers it's the job of the secretive bars all committee to set regulations on banks the chairman of the group says he wants the public to be better informed about the work they do it's not that many years ago since this was basically a group of central banks it

the bank won't very reluctant to lend money to mining companies without locking in. some percentage of the future production so it's not that the mining companies want to hedge the production themselves very often it's the only way they could get the money the other way is to issue more shares which the share the existing shareholders so then suffer dilution and they don't truly want that either so very often if they if everyone is commits prices going up it's probably better to borrow money from the bank rather than issue shias and the bank will nearly always insist that thirty forty percent of the of the of the production is hage because it's they need few days to risk a transaction for the bank because the price goes all over the place and they do they can't guarantee future repayment of the luck you mention mining there's a lot of talk about what would you call peak gold or peace over how close are we to this seeming like south africa the gold is really down the trickle i mean that paid to ages ago curious so what about silver and gold how is it we hit peak gold p

the prime minister has yet to respond. but central banks around the world, including the fed in the u.s. and european central banks are essentially doing the same thing. implementing drastic monetary easing measures to weaken their currency and to increase exports. >> one of the most important questions is how do you think this policy is going to affect japan's economy? >> well, actually, many economists have been wrestling with that question. some point out once prices start to rise it might be difficult to stop the momentum, but others argue it will take some time for the boj to actually achieve its target. >> it's hard to expect because considering japanese economy is suffering negative outward gap at 3% of level and also considering level is still high compared to historical level it's difficult to anticipate inflation number bring back to 2% level or close to 2% level. >> we also need to look at possible price hikes in the larger context. right now the economy has been suffering from a condition known as deflationary spiral. companies

the u.s. banksthe large banks, much higher than they've had as far as i can remember and i go back a long ways. >> bill, we'll leave it there. bill isaac, appreciate your time this morning and hanging with us through those earlier troubles we were having. >> thanks for that. tim albanese is announcing he will step down as the ceo of rio tinto. we knew we were going to get a write-down for the mozambique business. it soems like we're compounding the era. >> first of all, i think the mozambique write-down was not a surprise. i think the timing was a surprise because it could have happened much later. and as far as how the news goes, i don't think it's going to change investment case on the stock. i think that the investment case right now in the short-term is being driven by oil prices. i don't think the new ceo will change the strategy significantly. sam walsh is a well known manager, well known by the markets. >> the new ceo doesn't change the strategy. why change ceos? i'm sorry, investment sentime

the bank won't very reluctant to lend money to mining companies without locking in. some percentage of the future production so it's not that the mining companies want to hedge the production themselves very often it's the only way they could get the money the other way is to issue more shares which they share the existing shareholders so then so have the illusion and they don't want that either so very often if they if everyone is commits prices going up it's probably better to borrow money from the bank rather than issue shias and the bank will nearly always insist that thirty forty percent of the of the of the production is hage because it's they needs few days to risk a transaction for the bank because the price goes all over the place and they do they can't guarantee future repayment of the luck you mention mining there's a lot of talk about what you call peak gold or peace over how close are we to this seeming like south africa the gold is really down the trickle i mean that paid to eat is a serious so what about silver and gold how is it we hit peak gold peaks

i have not played the banks to the long side.'ll be honest, i have missed some of the money because four out of the five best stocks in the s&p were the banks last year. citi look strong. it has almost gone parabolic. i would rather be a buyer on a dip. if it gets down to $41 or even $40.50, i would rather be buying it there than buying it on a 52-week high. > that's andrew keene, president of keeneonthemarket.com, giving up apple for ebay. have a good day. > > thank you, you too. that's the end of the road for us today. coming up tomorrow, the ceo of volkswagen will be here to explain the stragety behind selling more cars in china than in its own backyard of europe as vw fights to become the number one car company in the world. from all of us at first business, have a great start to your week!

bank. one would say back to the rules, back to classical banking. but the question is, will they actually deliver on that? can they even deliver on that without hitting the bottom line of the bank too much? >> fair point. let's put that question to ollie. >> good morning. yeah, absolutely. banks, large investment banks like deutsche bank are facing some element of existential crisis within the context of the new regulatory regime or the age of regulation that we're in. that's fair none. there's a bare docks there. you're talking about the debris let me tell behind by ackman but he also made the bank into what it is and the expectations along with that. the profit expectations didn't meet the cause of various thing, but good will impairment and litigation charges. what does that mean? it means they're trying to draw a line under the old and sort of set themselves up for the new, you know with progress and strategic plan. >> and is that why you think investors aren't sending shares lower today despite the profits for the group? >> no. everybody has bee

the markets were up. now you think regional banks will do better than the big money center banks. tell us why you think that? >> well the regional banks have their own set of issues. as you eluded to the low-interest rate environment is providing huge pressure for net interest margins. however it's very clear that particularly the large regionals, the bank like u.s. bank kopp bb & t p&c phipps, third and wells fargo which i classify as a regional although a very large one, our moving market share. i mean they are seeing the lending volume that is sufficient to offset that net interest income or that net interest margin pressure so you know i think that they just present a greater source of stability and american banking. bank of america and citigroup will work through their is issues over the next several years but they're to the going to be returning capital to shareholders, i think at least until 2014. whereas the regional banks are already had their dividends established. they're able to grow them. they really are the stable banks in america right now. >> all right, we are going

the banks maintain, hey we sent a foreclosure notice. ent a sheriff sale but that doesn't mean that the homeowner no longer owns the home. the homeowner owns the home until their name vanishes from the title. the bank says we're not legally responsible for the house. their name is not on the title. >> jennifer: that is ridiculous. how is a homeowner supposed to know this if the bank doesn't tell them. >> i've had interview with judges who have told me if they got the notices that the bank had sent these homeowners, they too, would have thought i need to leave this house. i no longer own this house. i'm out of here. are there any requirements for the banks to let homeowners no? no. there is no kind of federal overarching regulation that you have let them know. >> jennifer: that has got to change michelle. what has got to happen to make that change? that is ridiculous. >> there is some language in the national mortgage settlement last year, the big agreement that was supposed to fix all these sort of terrible consumer abuses, there is langu