than previously thought treasury now believes this bailout will cost uncle sam just over twenty five billion bucks that's according to reuters and this is not including the costs associated with the they old and false promises tied down hundreds of billions of dollars of taxpayer bailouts doled out through tarp to financial institutions under false pretenses of what that cash could do and what it was supposed to do that's according to the man who was policing it touted of course the programs i'm talking about to the taxpayer with platitudes like this what's really innovative about this is partnering with private investors partnering with the f.d.i.c in the federal reserve to get all the resources we can to get those things off banks' balance sheets. i was referring to a particular program that i'm very excited to ask our guest about the man i was talking about critical of tarp the way it was dealt with at least is neil barofsky the former special inspector general for tarp and he's author of a fantastic new book he doesn't mince his words i have to say it's bailout an inside account

treasury could this be the biggest bubble yet this and much more now in capital account from washington. good afternoon and welcome to capital account i'm lauren lyster here in washington d.c. and we are on vacation and you see we've been broadcasting since october so that means were a little overdue for a break but in that time and in just the last few months we've interviewed so many amazing guests from jim grant to mark father to jim rickards even joining me as a co-host and we've covered so many topics that are relevant on any given day whether it's the fed or the eurozone crisis so we put together some of our very best and most popular episodes from the last few months for your viewing pleasure and the time while we're off and you can look forward to all new shows starting september fourth so mark your calendar and don't forget interviews can all be found in their entirety on our you tube channel you tube dot com slash capital account but for now let's get to today's capital account. good afternoon and welcome to capital account i'm lauren lyster and i want to get straight to our s

and even potentially treasury bill rates. and so those are his ideas now central bankers from around the world will reportedly join bank of england governor mervyn king in september to meet about the future of life or so what would happen if a hundred trillion dollar indicator was simply switch by the central banking cobol overnight what happens to old live war and library based contracts what room is created for major power plays which are probably trying to figure all that out and here to help us do that is bob english contributing editor for a zero hedge and economic policy journal dot com and he has really been looking into all of this and has some really really interesting insights so first of all bob english thank you so much for being on the show but it's great to be back here again and yes we are going to be discussing. all right that's not going away anytime soon first bob i want to ask you about bernanke you broadly he talked about switching to a market based indicator possibly but please decode for us because this

and the treasury department, in the e-mails we have, show that treasury -- was also trying to talk to the white house, various government agencies. have you the obama administration and ultimately geithner, to falls at his feet, the treasury department guiding along this process and they should in the be involved in this at all. >>stuart: it was a politicized decision. push out management people from the pensions, support the union people, make them whole. a very strongly political decision. >>guest: correct. it certainly looks that way. we are still awaiting answers. the administration has insisted in congressional testimony they had no hand in this, this was all pgbc but the e-mails now show there is potential that some of the officials may have purgered themselves, it is in the cheer. we are looking for more answers. but this is suddenly a big deal. >>stuart: we hear you loud and clear. thanks, vince. the internal e-mails imply treasury was the reason for ending nonunion pensions. what about this from former treasury official, under oath, he said otherwise. >> as a result of the de

conversations with a great minds as neil barofsky you know was the former special united states treasury department inspector general charged with overseeing the seven hundred billion dollars tarp bailout prior to coming to washington neil was a former united states assistant attorney for the southern district of new york here and a bachelor's degree in economics from the wharton school of business at the university of pennsylvania and graduated with honors in the new york university school of law in one thousand nine hundred five neil is also the author of the critically acclaimed book bailout an inside account of how washington abandons main street all rescuing wall street neil joins me from our new york studios neal welcome thank you let's start with you if you don't mind what path led you to overseeing this historic government program that the parent was designed to save the american economy from. well it was kind of strange i was a prosecutor here at the u.s. attorney's office in manhattan in two thousand and eight in the previous years i had done international prosecutions and then

treasury the ten year the two year book could this be the biggest bubble we have ever seen well here to talk about this is someone who was said he thinks as much famed investor dr marc father a publisher of the gloom and doom report and author of many books including the one you see here tomorrow is gold asia's age of discovery and he joins us from a gore a financial symposium in vancouver and dr father let me first say that it is a real pleasure to have you on the show today welcome back to capital account. of the pleasures of carly murray oh it really is all mine because i'm dying to hear what you have to say about treasuries because you've said before and explaining why people are willing to buy u.s. treasuries that offer a negative real yield or even invest in interim instruments with a negative nominal yield that people think if i give my money to the u.s. government for example at least i know how much i'm losing if i give it to a fund manager i'm a loser thirty percent i'd rather lose two to three how long do you think this trend can or will continue we're investors are willin

the government would come in and buy them up and the original idea behind the program in the way treasury was able to get it passed through congress was through a promise that once it bought up all these assets it would then use use its control over all these mortgage related assets to actually modify mortgages and that was something that was written right into the bill so the idea behind tarp originally was two parts one bailout the banks absolutely but the second leg of it and the part of that was really necessary for it to get the necessary votes from the democrats who still control both houses of congress was this promise for a big mortgage modification program and it was written right there on the front page to preserve homeownership of course what happened after the bill got passed though unfortunately or fortunately depending on your perspective they never went through with that plan and instead they took hundreds of billions of dollars and used it basically to buy stock in the banks preferred shares in order to fill those capital holes and uncle sam became an investor and as to th

treasury makes 85% of the disbursements and by the end of the year, we will have a non- treasury disbursements afforded to so we will no 100% of the payments actually made. similarly, 98% of the receipts coming in, come in electronically. we get 98% of their receipts electronically. we do know the individual transactions. there's a gap. although we know the transactions, we report the man after the agencies and they claim those transactions, classified those transactions and account for those transactions within the federal accounting structure and then monthly or quarterly, report back to treasury bond 224's or other filings to tell us how to classify those filings. we have the individual transactions and we know the results of the agency's classifying those transactions but we don't know the stuff in the middle. when you think about consolidated financial statements, you're talking about a huge compiler's an effort of sometimes individual transactions and sometimes reporting that transaction to different levels. the compilers and system should only be concerned with three things -- who is in

treasury bonds the treasury bonds are our national debt that's what we have to put a treasury bond is a promise from the u.s. government and whatever treasury it is around the world it's a promise from that government to tax its population in the future so they're they're promising us that they're going to extract taxes from us in the future that's what deficit spending does they sell this bond the federal reserve acquires it and they buy that bond they write a check here's a trillion bucks and they buy those bonds that checking account had there is no account there's no balance there they're writing a fraudulent counterfeit check to buy this thing and then so then the banks have they do this through open marc. now the banks have that one point five trillion dollars they're talking about in their accounts at the federal reserve and then the federal reserve is going to pay interest on it which we have to pay in future taxation and. that's very easy if it's causing all the money around mike i'm going to stop you for just one moment and if you hold that thought i can get to right after t

the ten year treasury had seven now percent uncharted territory. well as of or in the us three weeks ago rejoice the prime minister of spain was saying crisis solved that lasted what three weeks now we're seeing it in italy and the mood is really gotten you know pretty extreme there they're blaming president obama they're blaming i a mouse they're blaming the builder burger they're blaming everyone and we're seeing the rise of the five star movement and i'm really stunned about this one because i don't understand why this is not made front page news in the wall street journal yet but i think it will best be groucho who is a politician and anti politician almost running for office in italy and he's running on a platform there that says you know we're going to kick out all these politicians and his own personal viewpoint is we need to get off. of the euro and default on it you know that's pretty big news in and you don't hear a lot about it laura that is pretty big news i feel like there is a sense that for whatever reason i haven't really just heard

the only problem is, fannie and freddie have been borrowing from the treasury to pay the treasury back. >> each year, they have to come up with $19 billion in dividends. which, when you're not making much money, is hard to do. so they have been borrowing money to pay the dividends to borrow the money to pay the dividends. >> reporter: to end that spiral, instead of a dividend, fannie mae and freddie mac will now simply give the treasury everything they earn. the move is timely, because at the end of the year, the mortgage giants' unlimited backstop from the treasury will expire. next year, they'll have to make do with a credit line of $210 billion. >> they still have a $210 billion backstop. but they're huge. their total obligations are about $5.5 trillion. and in that scale, it's not as much as it seems and it's certainly a lot less than unlimited. >> reporter: the treasury is also pushing the mortgage giants to get smaller, faster by winding down their massive investment portfolio's by 15% a year. darren gersh, "n.b.r.," washington. >> susie: the former head of failed brokerage firm

of how it's grown and becomes so over sized so what eric though because we're not seeing this in treasury yields what are the maladaptive traits that we see developing as a result of these huge debt outliers. well i think i think what's happening in the treasury market is something that may not be directly related to two maladaptation it's rather a response by investors to changes in the marketplace so as your guest jim graham brought up last week there is a bubble in safe haven assets and i endorse that point of view so you have negative yields on five year swiss bonds negative yields on danish that and invisible yields on german u.s. and so on so that's a response by investors to a very real. disease let's call it in the global financial markets in which there is so much manipulation so much so much. fraud so much uncertainty even as to as to whether your brokerage account is going to be there tomorrow and that a lot of investors are making what i consider a rational choice in in putting their money somewhere where they at least will get it back right the worry about return of capital n

when you look at the return of me andes versus treasury. >> they are yielding 115% of treasurys theses. unusual. bouncing around but usually under 100%. a lot of people are worried about municipalities for the last couple years. the default rate of 18,400 issues traded by moody's since 1970 only 54 have defaulted. another 55,000 doing entities with only a couple hundred -- very rare that municipalities -- doesn't mean you should be picking and choose revenue bonds over general obligations and those with a central purpose type revenue like water and sewer. cheryl: there is mint which is a short-term money-market bond. >> one has to step outside the risk zone to get a little more yields. in a money-market space which is an average of 60 days. the maximum maturity. you won't get a lot of yields. got to step out a little bit and go out as far as 18 months to get more yield. it is not exciting but you will pick up some yield to go on the money market. liz: you talked about treasury inflation and protected securities. that is an anticipation of inflation because people keep saying the fed i

you're light on treasuries, is this why? >> that's exactly the point, michelle. it's taken us a long time to see this happen, but the handle has been coming up on treasuries, and you're losing principal value when that happens, we're looking for all the right prices for yield. it will include corporate investment grade, but you definitely want to be treasury light on this. >> kneel, what would you be buying right now. muddling along as you said, but as we do so, what are we buying here? >> you just don't buy a individual sector or stock. you go with a strategy and one of the strategies that seems to be working out there, bill, is the dow where you buy the ten highest yielding dow jones stocks and you hold them for a year. you're talking about a yield of 3.68 or 3.7% yield today even though the ten year treasury at 1.75, that's double what you can get of real high quality revenue producing and profit producing companies. >> neil, you have 25% of your fund in one year treasuries, are you nervous about that? >> i'm not getting any yield, and that is the problem. mos

treasury is closely monitoring the investigation of the u.k. bank. standard charter is accused of scheming with the iranian government to launder $250 billion. the bank's stock plunged 23% in london trading today. so what happens next? here to answer that: annemarie mcavoy, a former federal prosecutor specializing in money laundering. she is now a professor at fordham law school. ann marie what do you think is going to happen next, how much bigger is this going to get? >> this is only the beginning, this is going to get much bigger. there are going to be numerous investigations, not only the state but the federal regulators will get involved, the treasury department is getting involved, from will be criminal investigations, the f.b.i. is investigating. there will probably be an investigation an delight -- deloitt's involvement. it's going to get big and fines will be huge. in the end it will end with fines at the least. >> susie: how big are the penalties going to be and will anybody end up in jail? >> the penalties will likely be at least had the hu

secretary and treasury secretary of the united states lawrence summers wrote a paper explaining how the gold price is the determinant of interest rates and the prices of government bonds governments really in suppressing the gold price are more interested in supporting the government bond prices and keeping interest rates low that is the essence of the gold price suppression scheme so essentially when you hear ben bernanke you say that gold is not money and the central bank holds it because it's tradition and are you thinking that he's making that up and just putting on a good eye. and is trying to avoid answering the questions like the questions we put to the fed we were seeking access to their gold records the government's own gold because that is a form of money that determines interest rates and government bond prices and you don't have to trust me you can believe larry summers who became treasury secretary of the united states and why should anybody care that this is going on or potentially going on because this gold price suppression scheme is part of a much greater scheme of

: in fact, treasury is projectg is projecting that tarp will $60 cllion,bi mainly for programs to help struggling homeowners it says. as for the $245 billion of tarp funds spent on banks, treasury$6 secretary tim geithner insists they've already turned a profit. >> right now, it is $20 billion we earned for the taxpayers, very carefully designed. >> $20 billion that is the interest on the money. >> on the bank investments. most of it is back in the treasury. >> reporter: on charlie rose last week, geithner disputed barofskys main claim as well, that treasury put wall street before main street. >> of course, our job was to protect main street, the economy, the average american from the failures in the failing financial system. that's what we did and that is a just and necessary thing. to have let it burn would have been much more damaging to main street, the average american than what we did. look at what europe is going through now. and ask yourself: can you find an example of something as effective and powerful as the strategy we designed over that period of time? i don't believe you

i'm not sure it's the it's the traders the money market or treasury desk or these banks say ah if they do it will do that i think what free traders are saying is i think we can get away with this great right yeah there's e-mails now and those are some fun fodder for at least outrage in themselves but i want to ask you know you have said before that living in a central bank world is like living in a hall of mirrors or living under a central bank it's like being in a hall of mirrors and then more recently i heard you compare it to the truman show that movie where we're truman is in a fake world but he doesn't realize it until he's going along in his rowboat any hits actually on the campus and this is the limits of his fake world and i think you said we're already there so does this mean we're at the end to arrange things can continue to manipulate the fake world that they want. i think that we exit the fake world when people decide that they are living in it the jim carey character and in the truman show do made this discovery when the proud of his rowboat five member right. tore through

bills french treasury bills german woman's yielding less than nothing or c. . if the tips in this country treasury inflation protected securities yielding less than nothing are safe i submit that less than nothing is not a promising place to start investment. i mean you once investments all too frequently wind up delivering less than nothing but you don't sit out that way right that is the same with the support of the value proposition even passed muster with a two year old that was you know they know that they're not supposed to give their money to someone they want to get money but is there our role or is there a part that property rights play and this because we've seen m.f. global we've seen i've heard many stories of customers of m.f. global who had their money taken there put it in parent financial group and now the money has been taken from there so is there a role that people are more willing to put their money somewhere they at least perceive not to be safe because they're more afraid of it being taken you know. that is certainly that's part of it i th

behold, a child's treasury. ha, it works! this is mike coffman. mike coffman is a republican congressman from the great state of colorado. he at one point was flirting with the whole birtherism thing. mike coffman told a group of donors in colorado in may that he was not sure where barack obama was born, but that mr. obama, he said quote, is just not an american. now, a great reporter from the local nbc affiliate in denver decided to ask mike coffman about that. right? the questions that the reporter asks were totally reasonable. questions, they are question about mike coffman and something mr. coffman had done in public, but his answers in public earned him a proud place. watch. >> after your comments about the president, do you feel that voters are owed a better explanation than just i misspoke? >> i think that as i stand by my statement. that i misspoke and i apologize. >> okay, and who are you apologizing to? >> i stand by my statement that i misspoke and i apologize. >> we talk to you all the time. you're a very forthcoming guy. who is tellin

the federal reserve own treasury. even though we're not buying them as federal tax pay perhaps the fed is the largest treasury right now. banks all around the world. china is a huge creditor. we owe them and japan. governments are holding on to this debt. there was a story, i forget where it was run that mentioned that from the peek of the housing publ until how -- it was down about ho%. it it's actually down a lot more than that. when you factor in each household share of the new debt that's been accumulated in their name by the federal government. americans are basically already broke. i'm saying that, you know, we have just admit we're insole vent. american families can't repay the money that's been borrowed in money. >> we admit it. >> once you admit you are structure. just like greece. initially greece imposed a haircut of 50% oned bondholders. we have to do something similar. we have to lengthen the maturity. we have to tell people one year treasury bills we can't pay you. we can't pay the money. it's not just o