Matt Taibbi discusses Wall Street, Banks, Politics, Media, and Social Systems



good evening things are making it out tonight it's actually our second political series this month and considering that there is only three days into the month we've been busy but that's understandable right but joining us last minute is Danny Schechter a little bit about him he's known as the news dissector Schechter has spent decades working in the media and print radio local news cable news CNN CNBC network news magazines and as an independent filmmaker and TV producer he will be moderating tonight and he will be giving a proper introduction to mustard Matt Taibbi ladies and gentlemen please welcome to any shelter I like that we ever had an introduction like that since I was being booed in Boston some years ago I just wanted to say I'm here representing the Honorable mark Crispin Miller from NYU the great media ecologist and analyst who usually runs these sessions the political nights at this lovely bookstore but he has run afoul of a problem that family people often have the baby sitter disappeared for tonight and in his stead he invited me to come and basically introduce Matt and try to moderate if there is a debate Oh or battle here as Matt goes into discussing his book I just want to you know say something that there are a lot of people who are financial journalists and analysts and I sort of up try to be one myself with a new film called plunder the crime of our time which is probably why mark invited me to be here but I think I have to defer to the man who compared Goldman Sachs to a giant vampire squid on the face of humanity and it gets better than that in his new book which is laced with a kind of personal animus have a very creative type in which he also describes the reception that some of his work received from some of the brilliant minds and basically Wall Street tools who are working in the media a one of whom you know count stole over him and then basically agreed with everything he said but just didn't like the fact that he was saying it and he was a soon rewarded in the transition from CNBC to Fox News Charles gasparino so you know Matt not only writes about this but he writes about the impact of his work and the the way in which a lot of ideas tend to get distorted by the people who were the guardians and the you know who are running the foxes who are running guarding the henhouse on Wall Street and I think Matt's been brilliantly able to not only critique it but when a worldwide audience both the Rolling Stone his books his presence in the media and I'm really glad he's here I knew his father in Boston in the media which dates me but I have to say matt is a brought rolling stone back to being a publication that you know practices a gonzo I think hunter thompson would be proud but beyond that I think we need to listen to what he has to say I wanted you're going to talk about your book but we we can't ignore the time that out in our lives that this is taking place the election that that ended yesterday in a catastrophic defeat in my view for democracy and today the latest bailout from the Federal Reserve Bank not to the tune of six hundred billion dollars our president saying he felt bad he was shellacked but he wants to work with the people who brought him down so I wanted maybe the start Matt if you wouldn't mind just sharing your reactions to this election and and then let's segue into the content of your book which is called Griff topia he's talking about the grifting class that dominates finance in our country and dominates our country through finance Matt first of all I just wanted to say thank you danny for very much for coming and short notices it's much appreciated and it's a pleasure to meet you I also just want to thank the folks at mcnally jackson before i started in my last launch party here and they've always been great to me and they're an independent bookstore and we need to support those and they're great at what they do obviously people at UH at Spiegel and growl also I Cindy and Julie and Karen and Chris Jackson who should be here at some point I also has a babysitter issue I just wanted to say thanks to all those folks before we get started because um you know this book is obviously as you know a really difficult one and it took a lot of work and everybody's part um the election today yesterday obviously I it's just some of the results were really scary I have a slightly different take on it than other people I thought what I was really paying attention to wasn't so much the seats that the republicans gain but the ones where they should have won and they didn't I'm looking mostly at Delaware and Nevada and places like that and I think what happened yesterday to me the dominant storyline is that the tea party is now announced itself is really the kingmaker of the Republican Party and it's going to be impossible going forward in the wake of these results for for them to nominate anybody in 2012 who wasn't acceptable to this demographic because they now they not really rule the party and I don't know what you think but it to me that's that's going to be problematic for them going forward I think you know what we've seen is that some of the tea party wins it in the primary season this year ended up being losses for them if they'd if they just nominated a slightly less insane kind of candidate than somebody like christine o'donnell or sharon angle they probably would have taken those states and work I think we're going to see those divisions again in a couple of years but what about what about this whole thing nowhere where you know their whole argument you know the bailouts the big government they you know the you know government this is that they're taking back and yet today here we had a Republican mr. Bernanke announcing a 600 billion dollar bailout which was called an easing I wanted to be QE they did that today okay and you know so here we had that you know it was really a disguised stimulus plan wouldn't you say yeah no quantitative easing it's worse than its stimulus because it's not real money it's a quantitative easing for those of you don't know is is um it's a program that the Fed cooked up they did it they've already done it once a couple of years ago where they simply printed a trillion and a half dollars out of thin air and used it to buy assets which typically were mortgages or Treasury bonds and you know what makes it different from something like the stimulus the stimulus is money that was actually in sitting in the Treasury this is they just literally did the Aladdin I Dream of Jeannie thing and snap their fingers and made this money and they're going to inject it into the bloodstream of the economy but of course the this is really going to primarily benefit all the Wall Street companies that the last time around QE the first key weight quantitative easing was used basically to buy mortgages and that propped up the mortgage market and helped a lot of these banks that had bad assets on their books dump it all in the government and we're going to see more of the same this time around it's it's it's really an artificial way to prop up the mortgage-backed securities market and prevent the losses that really are already on the books of these banks from being recognized it's all this is really going to do is prevent the proverbial from hitting the fan for a couple of years well you know in your book you talk about going out I think to Nevada and trying to talk with some people out there about the financial crisis and getting a reaction that could be summarized in one word duh you know when i worked at ABC News we had a phrase called me go which stands for my eyes glaze over whenever I hear talk of a financial crisis and yet somehow you kind of decided you weren't deterred you decided this was a story worth following how did you follow it in what what did you learn and that's what's in your book in part you know yeah I told the story in the book the the sort of genesis of all this was when I was covering the campaign in 2008 and I was on the campaign trail following John McCain and we were in I think the town was Kenner Louisiana somewhere outside of New Orleans and everyone remember the whole drill baby drill thing he remembers that McCain was up on this you know on the on the lectern he was really building that one out that night he was talking about how the the reason for the spike in gas prices in 2008 was that the Democrats had prevented the Republicans from drilling both in the Alaskan national wildlife preserve and the and the Gulf of Mexico so it gives a speech you know we rousing applause in this Republican audience and then we the press all files back to its you know its cage and the airplane and and the reporters who are always picking on the candidates behind their back and to their face it's always different but behind their backs this one guy was sort of laughing the television reporter saying well as if and we cane what an idiot is if not drilling in the Gulf of Mexico is what's causing this spike in gas prices and I kind of looked around and said do we actually know what's causing the spike in gas prices and it was sort of like a cartoon you either heard the crickets you know nope nobody knew I didn't know and in this other reporter leaned over to me and said you haven't figured out that we're all frauds yet and this to go into a bit of a long-winded answer after that I wasn't really a sign that story or anything but I made a couple of phone calls he's always sort of panicking at that point that I was going to be writing about something that I didn't know about and the first couple of calls that I made found out that oil supply was actually up that year and and demand was down so gas prices should have been going down that year but they were instead going up and that led to this whole thing where I i did this investigation and i found out of that the commodities market was tightly control was tightly regulated had been since the 30s there had a limit that they had been placed on the amount of speculative money in the commodities market you they want most of the people in the commodities market to be actually consuming using those commodities like corn gas you know soybeans wheat all those things they didn't want speculators to come in and buy the whole market and then artificially jack up the prices so that was tightly regulated four five six decades and then in the early 90s these Wall Street companies like Goldman Sachs sachs quietly started applying to the government and asking for exemptions they said we're speculators but we'd like to be treated as what they call physical hedgers and so they started handing out these exemptions and over the course of 15 or 18 years they handed out 16 or 17 any of these exemptions and before you knew it in 2001 there was 13 billion dollars of speculative money in the commodities market by 2007 there was over 200 billion dollars in this in the commodities market and unlike the stock market where you can bet for or against stocks and commodities you can it's really all what they call long money it's that's other it's not long or short it's all along when you're when you're buying commodities you're betting on the price of it to go up and so when you have that you pour this enormous amount of money into the commodities market it artificially drives the price of gas up so that's the long-winded answer of what happened in 2008 and the fascinating thing to me was that neither of the candidates was talking about this we had McCain's drill baby drill explanation on the one hand and then we had Obama saying we all need to drive hybrid cars on the other hand and this big unexplained mystery was what sort of left for somebody to but whatever but i like about what you did you introduced into this discussion of commodity prices probably if we announce tonight we would have a forum on commodity prices I would me go suspect no one would be here okay but you also go a step further and talk about the consequences of this kind of speculation namely that people died that millions of people found that the life unaffordable if you're living on two dollars a day now you were living on one dollar a day or one dollar days worth of purchasing power I mean I think that is the missing link in a lot of the writing about the financial crisis what is it actually of how does it actually affect people we know it affects people were being foreclosed upon but it's not just them it's really interesting i was when i was doing the commodity stuff i was talking to this one oil analyst and it was a Saudi gentleman but he was very smart very interesting and gave me a lot of time and as he was describing what had gone on in the oil markets he also casually mentioned that the prices of there are 25 commodities in the goldman sachs commodity index and again they include things like corn wheat soy bean that that sort of thing he said all 25 commodities the price of them all individually went up every year from 2005 on which of course it never happened before in history and he kind of casually throughout to me that oh and by the way because of that an additional 500 million people around the world joined the ranks of the poor in the year 2008 according to I guess it was the WHL or something like that and that was a sort of a casual aside in our conversation because food prices had gone up and when they were the hunger story was reported that year I went back and looked it was again all treated as a supply and demand issue a normal market forces issue and nobody talked about the fact that this was purely a Wall Street casino issue that it costs all these people in Bangladesh and in Africa to go hungry it's a crazy story and yet underreported if reported at all I mean so when you start reporting this stuff people look at what you're doing and think you're whacked you know the we quickly figured out a rolling stone that this was this whole territory of stuff that nobody was talking about because the financial press the people who do understand this that we cover this stuff for a living they're mostly writing for audiences that are in the business if you pick up the wall street journal or you watch CNBC and you see all those incomprehensible numbers flying across the screen all day long it's kind of like watching ESPN ESPN is not for people who don't like sports it's for people who know what a zone blitzes or whatever they're not going to explain to you the rules of football every time you turn on television and that's that's the way the financial press operates they don't stop him and and back up and explain it to ordinary people that's not their mandate and and I think in the process of not talking to ordinary people over the over so many years I think that a lot of the financial reporters lost their perspective they're lost their ability to see the consequences of what went on and that's that's how they missed it I thought I wanted to ask you about one of those financial reporters but in a second because one of the things I discovered back there on page 16 be on the business section in the bottom in the back where the shipping news is there's a little report that reported at 3.8 billion dollars in advertising was poured into the internet radio and television by lending lending companies financial institutions and credit card companies between 2002 and 2007 so could this have anything to do with the lack of coverage absolutely i think you know just look at the names on the stadium's an attendee in the last decade you know am Eric West you know the I don't know if there was a countrywide stadium there probably was somewhere but all these fly-by-night mortgage companies popped up all over the country and they gained instant credibility everywhere they were there were advertisers in every single market the credit card companies obviously dominate television advertising and I absolutely think it had an effect on coverage in a lot of places because they're the only people who really were that liquid to you know to support advertising so the media doesn't really cover the media in fact that's maybe why there was such a negative reaction many mainstream newspapers to the jon stewart rally because he critiqued media coverage and they felt like oh he's attacking the messenger he's not really focusing on the message but when we think the Tea Party we think of some you know a old lady with a you know maybe with a one of those weird hats you know talking about big government and yet the Tea Party phenomena was kicked off by a media person or head named Rick Santelli on CNBC talk about that because you're one of the few people who really zoned in on this that and what did the content of what he said was yeah that the famous Rick Santelli how many people here saw that rant on on the internet the amazing thing about that there are a bunch of things that were amazing about it but I this was in what februari 2009 right at that point there had already been trillions of dollars in bailout money spent and they'd all gone to directly to supporting the big banks the very companies that got us into the financial crisis all that money had been spent and most of the people who are now tea partiers were basically quiet about it they didn't have I mean there were there were some ideological objections to the bail it but there wasn't this visceral hatred of the bailout until Rick Santelli got on television after and this was Barack Obama had just put forward the homeowner affordability act which was easily is Rick Santelli yeah he's the business reporter and CNN ofc be a CNBC excuse me and so he he was doing this so a live report from the Chicago Board of exchange is that right and and I'll get to why that's funny in a moment too but he was reacting to the news that Obama had put forward this program was 75 billion dollar program that was going to directly aid a homeowners who were close to foreclosure now people didn't react to the trillions of dollars that went to banks because it wasn't real for them but the 75 billion dollars which was again about all you know a tenth or twentieth of the bell at outlet up to that point was going to low-income homeowners largely minority homeowners and it was their next-door neighbors were get this money and that's why they got Somen so mad and the other thing that was amazing about it and Santelli was giving the speech in the floor of the chicago board of exchange and he was sort of doing it in front of this chorus there were all these traders behind him and he kept saying you know America are we going to stand for this boy in America responded with quote you know these shouts of booze and whatnot these were the same people who were driving up the commodities prices is these for commodities traders who were these were the speculators who were could cause the gas prices spike in 2008 that was the the America that though is the backdrop for this incredible media driven phenomenon the Tea Party and so it was so perverse and bizarre on so many levels but it would but it went around the country and it provoked this incredible movement it played to resentment you know do you want your neighbor having a nice bathroom an extra bathroom in their house absolutely not you know so it just played on the people of getting these people are getting away with something but no reference to the bank's getting away with a lot more and of course the failure to really support the homeowners has led to this incredible foreclosure crisis which is just deepening you know we have 794 banks now that are either insolvent or on the brink of collapse so you have a situation where the situation is getting worse but you don't really get a sense of that very much in the media wasn't even much talked about during the election was it right exception of deficits and it wasn't real to these people until it was people who are living next door to them I mean though the Russians have this amazing joke that a genie comes to a person and says you know he finds the bottle genie comes out genie says I'll give you any wish you want but the only catch is that your neighbor has to get twice as much and the guy says will pluck out one of my eyes you know and that's that to me perfectly encapsulated what the reaction to the bailouts was all about because it was just people they would they had this anger that we had to go towards somebody and well and then they couldn't allow themselves to be angry at rich people that couldn't allow themselves to be angry at their own party and so they had to be angry basically low-income minority homeowners and that that's where the anger went also I mean you didn't just you know focus on you know minority homeowners you and after the big poobah you know Goldman Sachs how did you come to get into this war with Goldman Sachs incidentally that Goldman Sachs in some respects lost but this was I had done the story about AIG after the election while you know I talked to my editors about that whole scene with McCain and I said we have to do in a financial crisis story we talked about it and we did one that was on AIG that was kind of all about what that Bella was all about and what it caused the crisis and it got this tremendous response afterwards and we were kind of overwhelmed by a way to originally only plan to do one and so we were deciding you know to what we were gonna do for the second installment of it and I started to notice that every single person i interviewed mentioned goldman and would they were in the middle of every single narrative in this store whether it was commodities or mortgages or the internet stock bubble or you know anything political influence Oh naked short selling it didn't matter what was Goldman was somehow in there and the other funny thing was nobody just said Goldman Sachs they always added some kind of modifier it was always like those at Goldman Sachs or and there was this hatred of other Wall Street people a lot of the people on Wall Street have this tremendous resentment of Goldman because they feel like this is this this is the big sort of monopolistic power that is unfairly beating them in the markets that are using their their size and their their political influence to game the markets and so I had this natural wellspring of sources people who are in in the business i'm sure you've experiences to who want to talk about what goes on and they wanted to point the finger at goldman that guy made it a natural new subjected to follow there wasn't just that it was your phrase you know when you compared them to a giant vampire squid now actually I forget who it was I guess the guy that wrote about the I'm blanking out now that you know basically said well squids don't attach themselves to the face as though you know therefore this is you know inaccurate or what have you but it seems like seems like the metaphor you know not not to be judged on the level of factual accuracy but nevertheless that was the kind of techniques that were being used to discredit you I actually had a funny story about that we have obviously a fact checkers at rolling stone and we take that check everything you know if I say this guy was blue they say what's guy what really was a blue and this the the line was Goldman Sachs is a great vampire squid wrapped around the face of humanity relentlessly jamming its blood funnel into anything that smells like money and the fact checkers they came to me I got a call in the middle of the night and the guys like squids don't have blood funnels I said that's wicked that's part of what makes it funny that it doesn't really work that way all right I just barely got that past the faction but again you know the obsession with facts often undercuts an obsession with meaning and what those facts and context and background and a way of connecting the dots in this story so many people to this day don't really see this you know don't really understand the story I don't want to understand that somehow they're in denial about it they're in you know I did a film called in debt we trust in 2006 warning of the credit collapse okay and it was basically the response was you're an alarmist you're a doom and gloom ER you're exaggerating you know are you talking about shut the up etc and then you know seven months later the markets collapse so I went from being a 0 to a hero you know how did you know you know and Sofia others did which was you know of course I wasn't the only one making this argument O'Neill but nobody was covering it or reporting it and this is part of the problem that you made Goldman Sachs a subject a fair subject for inquiry which led to those hearings with senator Levin and and you know a character out of central casting a Frenchman named fab you know of your cell you can't make us stuff and you write about it in this book so talk a little bit about that the reaction you know you took on this mega institution you know more powerful than governments in fact controlling governments and yet you a mere you know writer for a rock and roll magazine know what was perceived as a rock and roll magazine a get taken seriously and be the institution ends up paying 550 million dollars yeah it the funny thing about the way the Goldman piece unfolded it's just I think most of the criticism that I got wasn't that you got this fact wrong or that wrong it was really all about the tone of the piece if you if you dug into if you actually read the things that people like Charlie Gasparino or megan mcardle wrote about about my article the Atlanta she writes for The Atlantic they they really often would say things like well yes it's true Goldman how did this or yes it's true Goldman was shorting the market while they were selling mortgages but if you know that wasn't that big a deal and they were their whole point really boiled down to well Goldman wasn't the only one if when you when one does everyone doesn't so therefore it's not that big a deal in my response you know what why pick on Goldman and I said you know because I can this is their turn you know the you know we picked one investment bank and obviously there was a little bit of a literary strategy here to kind of make a James Bondy and villain out of somebody because this material is difficult to swallow and dry and you have to add a little bit of drama in order to get people to digest it and there was a little bit of that in this piece but that didn't mean that there were any less guilty or good that they weren't guilty of the things that we were writing about in the piece so I think that there was there was that attitude that you're not supposed to to be vicious when you when you talk about the people who are the producers of jobs in this country and the other thing I thought that was interesting is that I wrote about these these guys not having had a whole lot of personal contact with people who work for Goldman Sachs and I as I was writing the piece I was imagining in my mind's eye what they must be like according to their actions and when we saw those hearings that you talk about it was incredible that they actually were exactly the way that what imagined them to be the most striking characteristic I thought of those guys is that they really do believe in this notion that the more money we make they know what's good for Goldman Sachs is good for America is good for everybody and this complete completely unapologetic attitude like you know how derry babe it seemed very put out that they had even had to be come to answer questions in the Senate and it's a lot of people ask me are there do they really believe this stuff to their do they really believe that that you know uncheck period is actually good for society and it's not an act I did when I when I would later have the opportunity to meet a lot of these people and it's absolutely true thats act that is act exactly the way they are which makes them great villains I just want to clarify something because your remarks here you know the guy from Fox News in the back could be listening to those remark insane taieb is admitting and he falsified the story and I don't didn't hear that and what you just said what I'm interested in is how sometimes quote the facts can get in the way of the truth because the facts are selectively chosen and not put into any sort of narrative that makes sense out of them yeah I think I think there's bias in every news story I think every newspaper chooses which facts to to include which facts not to include which facts to put high which wants to put low what to put in the headline where'd up with the picture this is this is all bias I think if you're going to be biased you should be out in front about it and you know I am I think when I lived in Russia one of these I loved about Russian journalist is that their news reporters all wrote in the first person and they had personalities and you knew who they were you they was sort of like a relationship that you have with the reporters there they let you know where they would know where they were coming from personally and that allowed you to make a decision do about whether or not I trust this person to tell me this bit of news or not and it's you know I'm not discounting entirely the way we do it here in America with that dry third person we need that kind of reporting as well but I think I think there's a place for that to sort of you know be it be a person so that people can relate to we're going to open this up questions from the floor but you know before we do I've been sort of treating you more or less as you know a knower at all you know an analyst somebody who's a journalist reporter you know kind of offering a sense sis of your argument but it seems to me like in reading this book in the last hour I see you as sort of an artist I mean I see you as somebody who's actually approaching this material with a with color with tone with temperament with you know insight and I wondered if you would be willing to read a little something i'm a terrible reader maybe we should wish if we should probably pass in that book all right well then let me suggest that when you bill I buried it and read it aloud because I think you'll find it a very enjoyable experience now not to keep you from the man let's take some questions and maybe just give me give us your name so we know you are you oh okay he sees I'm doing him next I mean you know this seems to be on the coast was called a moderate though the origins things are kind of crazy in the Midwest right now that's underreported story and no anywhere from Detroit Cleveland Cincinnati st. Louise our graveyard oh oh yeah well I just got back from I mean I know it's not the Midwest I just got back from jacksonville florida i'm doing a thing on the foreclosure crisis and it's unbelievable the the total devastation if you go anywhere in this country that's outside Manhattan really its striking even the changes in the last couple of years or striking because I you know I always have to travel the country a lot for the for the campaign reporting but just in the last couple of years whole sections of cities are you know now boarded up and and you know neighborhoods are half and foreclosure and it's it's an amazing thing to see it and I think you're right it's kind of an underreported phenomenon but that's kind of the way we cover those we don't we don't really you know show poverty on TV that much and connections are F&R and made if one house goes into foreclosure you know download the property values that affects the house across the street affects the tax base affects the school's affects the police affects the libraries affects the schools in other words the ripple of all of this you might be up to date on your mortgage but you're going to be pulled down by all this and by the way in case you haven't heard dennis kucinich was reelected from ohio so from Cleveland I other questions in the back yep yeah I'm not navel is consummated for us today pongal oh yeah I came out here to get my MBA Columbia actually I just want to totally agree with you on what the Wall Street people how they view the world as a Midwestern moved out here it was kind of a huge surprise to me just that whole attitude maybe we're more simple there I don't know what it really is but I like to think that it's just something that most of the country doesn't understand and I wonder what you think it'll take cut the legs out for a while yeah God first well I just got back from Wisconsin yesterday I was and I was in Madison a great place they have family out there where were you what city you're from Milwaukee okay cool um I think you know as I I've been doing lobs a lot of traveling and I increasingly come across people who do get what's going on here but that's because they've personally had a confrontation with Wall Street's than way they either got wiped out by credit card debt or they got foreclosed upon where they lost you know forty percent of their pension funds value because you know a bunch of bankers and Wall Street sold their pension fund worthless mortgage-backed securities people are beginning their being forced to learn about this stuff because it's affecting them personally and I think unfortunately that's probably what's going to happen that because nobody's stepping up and doing the job of educating people i thought the democrats had a great opportunity after barack obama got elected the economy was in complete collapse the republican party was completely in disarray and discredited and that was a opportunity there for this teaching moment to kind of tell everybody hey this is what went down in the last ten years you were a victim these people over here did this but they didn't do that they kind of like took a fork in the road and decided they wanted to keep that constituency you know as campaign contributors and so there's no there's no big political mouthpiece out there doing that job and that's that's that's kind of the problem no just on as a student at Columbia you might be interested in if you've seen his film inside job my film focuses on journalism how journalism was complicit or the media was complicit with the financial crisis but they go after the academics and they go after the Columbia Business School which just received a hundred-million-dollar you know you know in money from owed some sort of private equity you know thief and I think it would be interesting for you to check that out about how in a sense the economics profession and the Schools of Business have been taken over you know I think James Galbraith made the point you know that out of a 15,000 members of the American economics association only 15 sort of saw this whole thing so this bubble building and so this whole crash coming so you know the people are supposed to begin to know are often the least of informed about any of this other questions yeah like the way that you want to wake aren't educated and like the Empress what I do like on a basic level like what the bailiffs rolled out is and in person if I'm wrong but they gave money to the big guys to lend out to everybody and identified by saying you have to get over their car loan you're not going to be able to get home right so we've got to get money to this middleman to jack up interest rates and then I know what why couldn't they just like just say this in the middle like we're giving money middle man well that was the ostensible justification for the bailouts them and I even talked to Paul Kanjorski the congressman from Pennsylvania he said when we did these bailouts we sat down with these guys from Wall Street we said there is an implicit agreement here we give you we're going to give you this money now we're going to save your asses now and you're going to kick-start the economy again and put people to work and what they did is that we gave him the money now when they kept it you know that was basically what happened if you if you look at what happened in 2009 the the banks that had been showered with bailout money they all came and that they they said that we feel apprehensive about this economy we don't want to lend in this environment because it's too uncertain we're not sure about the health care plan and what the costs are going to be so they went there for were not investing and they immediately started setting aside massive amounts of money for bonuses you know Goldman Sachs which was on the verge of collapse which would have gone out of business in September 2008 without a bailout I had a bonus pool that was what well above four billion dollars in the first quarter of two thousand nine so there were we gave them all this money and there was that deal worth they were supposed to lend it to us but instead they kept it the other part of that I'm sorry to make this a long answer is we slashed interest rates down to basically zero the Fed did and made it possible for these banks to essentially borrow money for free and banking cost of capital is everything at your you can borrow money for nothing then it's almost impossible not to make money a lot of these banks were borrowing at zero when turning right around and lending the money back to the US government at three percent but what people don't realize is when they slash those interest rates down to nothing it was ordinary people who had CDs and savings accounts suddenly they're not earning interest on their savings all these people who did the by saving and not blowing their money on speculative bubbles got punished and we rewarded the people who did exactly the wrong thing and these are the kinds of things again we didn't we didn't explain to people you said earlier that you had been her in Russia I mean are you interested or have any comment on the fact that the word oligarchs which was used and is used in Russia is now sort of being used here to describe financial Titan III see that parallel all the time it kind of had a profound influence I you know the loans for shares scandal in 1996 in Russia was this thing were they the this they were privatizing the big jewels of Russian industry so they handed these billion dollar in just uh you know companies like nerilka nickel and sedan Co these giant will compensate handed them to these gangsters who were friends of Yeltsin these people were made billionaires overnight they immediately took that money and gave it right back to Boris Yeltsin's allure re-election campaign and that's how a one in 1996 and that whole circular thing give thief money thief gives money back to government and they keep each other in power that's exactly the narrative that we're dealing with here it's we build these guys out there going to give the these same politicians campaign contributions and it's going to be the same and what cycle it's an exact parallel you know for all these years though you know people have pointed to Africa and say you know you have a kleptocracy in Africa they're just stealing seems like the level of theft in this country makes them look like rank amateurs in fact transparency international just did an international you know kind of ordering of the corrupt nations of the world I think the US was number 20 or 19 it's funny I remember what Kissinger once said about the Soviet Union which he described it as upper volta with rockets and and that's kind of to me that's what we are now upper volta with rockets yes go ahead bad day for the coming here i I don't I think that their mandate is going to be just a bus kotori there they're going to they're going to make a show of trying to roll back for instance the health care program but they can't do it obviously because they don't have the Senate and the president still in the White House they're gonna they're going to do a whole lot of things that are going to try to play to their base and and none of them are going to New is going to be complete and total gridlock III don't know exactly what they're going to do but it's it's summer it's not going to be pretty so still mate mate yeah the left and the White House very educate the public about what house for them and use me you think bleep pushing the women on the right as the news topics of the last couple years but there are two people to remember black or center I think therefore essential to the Nazis did you waiting for educating the country Elizabeth Warren's political career immediately starting in full and then when clinking has just died right I wondering what medicine well first of all I love Elizabeth Warren I think will not I don't love her that way that's why was my wife here yet Elizabeth Elizabeth Warren is a fantastic person and I think she's an example of the kind of politician that is going to be needed in the future because there are very few people politicians who are out there who are literate in all these issues I can think of only a couple Ted Kaufman comes close but he's not at her level Eliot Spitzer who's of course no longer a politician I know Joel can either give anybody else well it's interesting about Elizabeth Warren you know she is a bankruptcy expert you know this is can't think of anything more boring you know and a bankruptcy expert and yet she became not only a force that that forced the administration even you know and the Democratic Party how it diluted as they did to actually come up with this Consumer Protection Bureau now in the federal reserve bank but she was one of the few people who could go on television whether it was Oprah or The Daily Show or wherever and explain this in a really clear practical way and and you know in an engaging way without a lot of ideological you know you know overcharging of the issues and I think that she it was very hard for the people who wanted to dismiss her to do so because she was that good sure and and again this this stuff is so arcane when I when I researched this book the people who I talked to who knew about mortgages didn't know about commodities I would ask them a question about how the commodities market would work none of them know this this stuff is all it's highly specific and and in order to have an overview all of it like she does it's it's a very rare person who has that kind of background now great story in this book you may or may not know anybody here from Chicago nobody okay I I visited I was doing it too in june and i was struck by you know that the meters The Meters had doubled in price you know there's a little flashback but the Cuban Revolution was triggered in part by Batista giving the parking meters in Havana to the Mafia who ran it and collected all the money himself so the first act of the Cuban Revolution was to tear down the parking meters in Havana now fast-forward to Chicago the parking meters in Chicago were sold to people from Abu Dhabi and and other investors and you write about this brilliantly in this book I didn't know the backstory tell us about it because it's fascinating I had a guy who works for so you know anyone know what a sovereign wealth fund is just these do these foreign government run funds or taking them in a sort of giant State hedge funds and countries like Saudi Arabia and United to have Arab Emirates they have these big pools of money the poor Singapore they have these big pools of money that they get usually from selling natural resources and then they these funds go off all around the world in search of investments to make themselves bigger I have a friend a friend who worked at Middle Eastern wealth fund and he called me up one day so you had the weirdest thing happened bunch of American Banker showed up on our office and we had a presentation where they tried to sell me and my bosses the Pennsylvania Turnpike they had a slide projector they sat down you have to picture the scene with a whole bunch of sheiks sitting on one side of the table and a bunch of bankers i believe it was morgan stanley on the other side of the table who are like look at how great the toll booths are they're all clean you know the highways don't have cracks in them and this guy was telling me this whole story about how these all these things are for sale and then it turns out that we're doing this all over the country these public-private partnerships where you know what happens is the governor or a local government will get into a budget crisis and in order to patch the hole for that year they'll sell 75 years worth of revenue from some state infrastructure in Chicago they had a budget problem and so they sold all the parking meters in Chicago to a consortium of investors that was led by an American investment bank and what they always do is they have they do it through an American investment bank who then puts a Western run front company in charge of servicing all these properties but the investors in all this are foreigners and the and in this case that a lot of them were foreigners from the Middle East who made sure that their stakes were twenty-five twenty-six percent there were no majority owner so we didn't know who they were and this is going on all over the country and nobody knows about it when I talked to the Speaker of the House in Pennsylvania I said well how do you feel about them trying to sell the Pennsylvania Turnpike to a bunch of guys and in the UAE and he goes they did that you know and yet he had no idea this is the Speaker of the House in Pennsylvania had no idea that this was going on he alderman in Chicago had no idea what's going on well you know the implications of all of this in terms of public be held property being transferred to a private firms and in Chicago they you know they did this deal where they kind of underestimated significantly the revenues for Chicago from these parking meters so you know the Chicago is making some money but these guys made five times as much on this deal is a really bad deal for the people of Chicago and the situation in Chicago is not just that there are parking meters but that cars are towed you know fast you know they're kind of cruising up the street and they start to sew the people who really gets snared in this are the people who can afford it the least and that's again how financial analysis here and these colorful funny stories come back to ordinary people getting screwed and and often that's not reported and that's what I think it's very important about about you know a maths work because he doesn't lose that dimension of you know of the analysis of who who wins and who loses who benefits and who doesn't and I think that that is very important and it's a standard that we have to confront journalists with you know are they explaining this in a way where they missed a fun it and obscuring it with all kinds of you know language that's so impenetrable and so dense that nobody can understand it they just tune out and turn off and I think part of the way they could get away with all this is that it was soaked it was made unduly complex you know these mortgage-backed securities the securitisation machine you know the ratings agencies so many different elements in all of this and so it's hard for people to realize this is a heist going on in front of our eyes is the biggest crime in history yes you disagree the tea party's kind of an easy target right now but what do you make of turning is an oligarch anything Mike Bloomberg attempted hate himself is the white parts and modders try to interject himself into the twenty twelve election I don't know uh you know given he go to Jersey City yeah not to be perfectly honest when I look at christine o'donnell and sarah palin Mike Bloomberg doesn't even seem that bad to me i think i think you know as a minimum standard sanity and a fourth-grade education you know if we do better than that i'm gonna be happy basically and you know bloomberg boo look he's a piece of you know a billionaire and obviously he is news agency didn't do it tremendously excellent job on on on this crisis and he has his own intro financial interest but i think we could do worse yeah yeah not sure given the current crisis last night's electrical and what I believe is what do you think the chances are of actual recovery oh I it clearly after the crash in 2008 they they surveyed the landscape and they made a decision that we can either put people back to work or we can we can save Wall Street and hope that they put people back to work and they made the decision to to rescue Wall Street and so what we have now is this jobless recovery where the stock markets are humming along again the even those high yield mortgage-backed bonds are all recovering and everybody who is in that world is starting to do well again the banks are making big profits but as the same thing that happened in the middle part of the last decade is you know this obscured the fact that there were severely overrated assets on the balance sheets of all these companies and eventually that's going to come out and that's going to result in another another correction for all of us I don't see any evidence and least in the people who work in Wall Street tell me that there really isn't any evidence that we're actually recovering in any real way in any ended our industry is actually recovering they tell us that we're having a financial recovery that if you oh and the busy this this and that asset that you might see your portfolio go have senior portfolio up recently but it doesn't mean that people are going back to work and I just don't see it happening yeah well the IMF just made a real issue to study international monetary fund usually the argument is unemployment is caused because there's there's you know jobs or people would don't have the skill set to get the jobs and there's this growing gap between people who can do the work and the jobs that are available hence unemployment isn't it bad they went and they looked at the relationship of unemployment to foreclosures which in a risa report which is fascinating basically saying that that is more responsible for the unemployment and the actual pain that people are experiencing the frustration that they have in trying to get somebody in the bank to answer the phone to try to get you know a promised modification of their mortgage to actually happen you know they're tearing apart the lives of so many people and most of us are insulated from it the humanity of all of this tends to get lost I was went to an event sponsored by a group called naka the neighborhood assistance corporation of america in washington DC and they put out an announcement you know if you need help with your mortgages will give you free counseling and they did it at a hotel on sixteenth street in washington DC they expected about 2,000 people 20,000 people came surrounded the hotel for five days and five nights okay desperate and these were not on him please were not homeless people but people didn't want to be almost people people who work for the city for the Metro in Washington for you know various government agencies even some teachers some lawyers were there well with their mortgage papers trying to figure out what to do how to respond and you know I was down there you know covering all this and I noticed that across the street from the hotel is the offices of the Washington Post so the Washington Post didn't cover this this is actually literally they have to open the window and look out and see all these people surrounding you know this hotel which is across the street so I went over there and I've ran into a friend of mine Sochi we didn't know about it nobody sent us a press release and you know finally they came and reported it on the very last day if they had reported earlier i'm sure it would have been 50,000 people in Washington and what you see the level you know it really is a depression feeling you know of people who are you know don't know what to do essentially just to follow up and not quickly i'm doing a foreclosure story now and i just saw I was looking at some statistics that there are up to 11 million people who are in danger of foreclosure which means there's a long way down we still have to go in terms of housing prices and have been n and lost value not just for houses but for mortgage-backed securities which are in everything which means there's which means that there's a long way down for the economy to still go so that panting is your question it's dead it also i would just add that this whole thing we're hearing about robo signers you know machines signing foreclosures and the rest of it these abuses which the courts are finally being confronted with don't deal with the abuses at the front end when these people were sold mortgages that were worthless and talked into to taking them on and found themselves pretty soon in unaffordable assistive situations which the people selling it knew they would be having analyzed their financial condition anyway I think we're I think we have time for two more sir one thing that we explained right but department is also that the relationships that financial reporters have to maintain on Wall Street first shirts trunks actually criticized Bartiromo yeah that was a relationship razo citibank why and I'm it he's a bomb thing I think I think in in journalism it's obviously a very difficult thing every journalist has to worry about the keeping friends because every time you do a story it turns out even truths that seem harmless to you can cut really hard to people that you're writing about even if it's one shade off what they were what they what their vision of themselves is so every time you write a story about anybody if you're telling the absolute truth you're going to lose friends that's just part of the business you know I'm in a position where I don't have a specific bead and so I'm not dependent upon the same group of sources all the time and and even though even in some places where I do kind of try to cultivate sources I have lost a lot of friends over yours like for instance and in Congress there are some places where they don't return my phone calls anymore but that's that's a you know that's part of the job I mean I think I think when you get too close to to your sources it's it's really problematic and there's an ethical issue there that a lot of journalists struggle with answer your question we're going to take a last question here and then Matt's going to sign books over here I'm going to just announce a little campaign that I'm involved in called the jail out campaign instead of the bailout campaign where we're doing a national internet petition to try to call for a full investigation the indictment of people who are financial criminals their prosecution and their incarceration so if you're interested in that you can chat with me as well because we're trying to I'm trying to as a journalist also try to be a bit of an active on this issue but let's look let's hear from this last question now let's give Matt a big hand hi David I dude thanks for coming I think you're a badass figure frozen so we've kind of talked about like how there's incredible wealth inequality and the really rich guys who have a lot of the money they have media by the balls and they have politicians by the balls and because we need to get a car loan in a lot of cases they have us but balls hmm do you see any of those things changing sort of like I mean it's an internet petition going to do it or like is it gonna have to be like World War 3 any any thoughts I it's a really good question but one thing that I started to think about as i was writing this book is that it occurred to me that all these people are completely dependent upon the people who they owe money to I mean who owe them money they there are these millions of people who are in foreclosure what if they all stayed in their homes what if they what if they all went to the courts and demanded that all these people produce their paperwork to show where you know that they actually own these notes what if all the people who owed credit card debt just decided screw it i'll take the bad the bad FICO score and you can you can hold on to that dead you can keep it these people they're all desperate they have an incredible stake in the financial survival of the entire country because if everybody goes the bankrupt if everybody defaults you know lot the losses on their books are going to be massive so there's really a game of chicken that's that's going on between all these debtors these individual debtors out there and these massive banks that are that are trying desperately to conceal the losses that they've already understood are going to happen at some point so people have a lot more power over these financial companies and they realize mean it's like that old adage you know if you if you owe a dollar you have a problem but if you you know a million dollars the bank has a problem and the you know these people have a huge problem and there we have to make them more invested in our survival one of the problems with the foreclosure crisis is that the these banks are not actually the way they don't actually they're more than actually the lenders of most of these mortgages they were they were taking money from in the investors in those mortgage-backed securities so when you pay your mortgage every month they're paying that's the whole amount into a trust that they owe money to so when you only pay part of your mortgage they owe the rest of that the difference out of their own pocket to the trust that's why they're all desperate to foreclose because modification doesn't do it for them they're going to end up owing thirty or forty percent to the to their investors so we have to get people connected back to to the you know there's a confluence of interest between the investors and all these assets and and the people who actually ended up getting these loans and this dude banks are just in the middle and I think if we can eventually there might be a way to sort it all out and return some sanity to it just finally there's also the Borowitz option RF you saw andy Borowitz is column today reporting at 55 million americans our seeking citizenship in canada as a result of the election anyway thank you very much for coming let's give Matt maybe if we can and also this wonderful book store putting on this event you




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