CapitalAccount 4/1/2013 - Minting the PLASTIC Coin & Countering Claims of Metals Manipulation w/Chris Martenson & Keith Weiner

Welcome to Capital Account. Is the stock market partying like its 1999? Despite major risks and lack of corporate transparency, the stock market has made strong gains over the last year. As Bloomberg recently noted "Americans have missed out on almost $200 billion of stock gains as they drained money from the market in the past four years, haunted by the financial crisis." So who is buying stocks given so many Americans are pulling out of the market? We talk to Chris Martenson about his outlook for 2013. And Congress' success in negotiating a fiscal cliff tax increase was portrayed as a major accomplishment, an increase that will add 600 billion dollars in new government revenue over 10 years. But additional revenue averaging $60 billion per year is less than 6% of our current trillion dollar deficits. We talk to Peak Prosperity's Chris Martenson about the prospects of reducing the US's debt and the plausibility of minting the trillion dollar platinum coin. Plus, gold tumbled after the release of yesterday's Fed minutes. Gold has been on the move down since last October, but the mention of a potential end to QE brought gold prices lower. Dennis Gartman, publisher of The Gartman Letter, wrote that gold bugs, operating on the thesis the Fed has lost control of the money supply, are in tatters. Other gold traders, according to Bloomberg, expect prices to bounce back from the longest weekly losing streak in eight years, as concerns mount that US lawmakers are not doing enough to control budget deficits. Is there more to the swings in the gold price than meet the eye? We ask Keith Weiner, president of the Gold Standard Institute and CEO of Monetary Metals, if the claims of gold market manipulation are founded. And our discussion of the "dairy cliff" sent some viewers over the YouTube commenter cliff. Lauren pulls the conversation back from the ledge in today's Viewer Feedback. Plus Lauren and Demetri have an important message at the end of the show. Minting the PLASTIC Coin & Countering Claims of Metals Manipulation w/Chris Martenson & Keith Weiner

CapitalAccount 15/10/2012 - Depression-Proof Banking and Monetary Mayhem in Myanmar w/Chris Mayer! ,

Welcome to Capital Account. Finance Chiefs from around the world are concerned about another global recession, the eurozone crisis, the US fiscal cliff and a slowdown in major emerging economies. They can't seem to agree on what to do about these concerns however. This is according to accounts from the Wall Street Journal and Bloomberg citing news from the IMF's gathering over the weekend. Now, news from the IMF is naturally a "Big Picture" deal, but it's easy to lose sight of the nuances in the global economy when one focuses on multi-national corporations or global policy institutions. This brings us to a topic that we cover today with our guest Chris Mayer, author of Capital & Crisis. Chris travels the world looking for investment opportunities, and his travels recently had him visiting a country that most americans know about mainly through stories of self-emolating monks or sectarian tensions. This country is Myanmar, and it presents some interesting opportunities for investing, as well as one very interesting feature of "monetary mayhem," as Chris Mayer puts it. Apparently, the only foreign currency the people of Myanmar accept is the US dollar, despite all of its problems with only one caveat. The dollars must be in mint condition, and we do mean mint...not even creased dollars are accepted! And, is the CEO of Morgan Stanley a "reformer" relative to his too big to fail peers, as he is reportedly trying to get the bank to run a less risky, less complex bank model? That's how he's been cast by some in the mainstream press, but what about banks that have stuck to conservative, vanilla banking even during the boom times? Some of these banks have survived despite losing major market share to financial sausage factories like JP Morgan for example. How does this work, and are there investment opportunities for what our guest Chris Mayer calls, Depression-Proof banks? Chris Mayer, author of "World Right Side Up: Investing Across Six Continents," joins us for the show to discuss all of these topics and more! And last but not least, in today's "Loose Change," Lauren and Demetri tackle the latest absurd comments uttered by Federal Reserve Chief Ben Bernanke, who recently spoke out against "the benefits of currency management." He slammed emerging economies like China and Brazil, which are resisting pressures on their appreciating currencies by soaking up the excess dollars printed by Bernanke and his ilk through their own money printing. Is this a case of do as I say not as I do? Or is Bernanke really this clueless? And what about Europe? The latest news from the continent that bore the greatest tales of feudalism is that we may actually be witnessing the birth of feudalism 2.0. Demetri explains how the death of bankruptcy law and sovereign default has moved the world closer to what we lived under during the middle ages. Central Planner Idol Worship and the Return of Feudal Banking! In today's episode of "Loose Change," Lauren and Demetri tackle the latest absurd comments uttered by Federal Reserve Chief Ben Bernanke, who recently spoke out against "the benefits of currency management." He slammed emerging economies like China and Brazil, which are resisting pressures on their appreciating currencies by soaking up the excess dollars printed by Bernanke and his ilk through their own money printing. Is this a case of do as I say not as I do? Or is Bernanke really this clueless? And what about Europe? The latest news from the continent once littered with feudal manors suggests that we may actually be witnessing the birth of feudalism 2.0. Demetri explains how the death of bankruptcy law and sovereign default has moved the world closer to what we lived under during the middle ages...A world lit only by fire!

CapitalAccount 12/10/2012 - Algorithmic Trading to Algorithmic Campaigning, Behind the Political Scene w/Sasha Issenberg

Welcome to Capital Account. Last night was the US vice presidential debate between Joe Biden and Paul Ryan. If you pay attention to the message, the commentary, the fact-checking, the alternative analysis and criticism, or even the horse race coverage, there may still be much that you are missing. What about the stuff that goes on behind the curtains, deep within campaign war rooms? Well, campaigning has come a long way in the past twelve years. Specifically, technology and science has made available techniques and strategies to campaigns that were, until now, used far more extensively on Wall Street and other industries. The use of these technologies has enabled things like data mining, modeling and behavioral analysis of voters to target the electorate more efficiently, and with greater effect than ever before. These techniques have been particularly advantageous to "get out the vote" efforts, but much progress remains to be made. Our guest, the Victory Lab author Sasha Issenberg, says political campaigns have historically been resistant to innovation - he'll tell us how that has changed in recent years, particularly since the 2008 presidential cycle. Since we often cover the field of algorithmic trading, we thought: what about algorithmic campaigning? Just as in finance, when deploying technology to areas once governed by human beings, complexity becomes an issue, not just for those using these new technologies, but for the reporters and journalists on the campaign trail who are tasked with covering the candidates. What is there that the rest of us are missing as a result, and what is the greatest thing we can take away? Sasha Issenberg, author of the Victory Lab, is here to tell us. Plus, the E-U wins the nobel peace prize, a prize that has often come with strings of dubious attachment. What is the nobel committee up to this time around? And what is our friend Jamie Dimon and his firm JP Morgan up to now? They saw a big earnings jump this quarter, and the CEO himself attributed much of this to mortgage refinancing. Demetri and Lauren talk about this, as well as Lauren's comedy routine in today's "Loose Change!

CapitalAccount 11/10/2012 - Jamie Dimon Replaces Jesus at the Temple and Lends Long to the Orthodox Church! , Stephen Leeb: the Missing Presidential Debate on Trickle Up Economics & the Energy War

At yesterday's Q&A, Father Andrew from the Vatopedi monastery in Mount Athos, had a very interesting question for Jamie Dimon. He said that his church was interested in borrowing for the long-term...specifically, 600+ years. Imagine the int erest payment on that float? What was funny though, was Jamie Dimon's response. Speaking with an almost divine sense of self, Jamie responded to the Father by saying: "How much do you want to borrow? I know we bank churches...if we give you money and you shouldn't borrow, we are going to get blamed for that too, so sometimes we say to you "no, we are not going to do it and its not good for you either"...Its like selling too much liquor to someone or letting them have that 5th drink at the bar or whatever and so, but, i'll give you all the help. Send me an email and i'll give you all the information you need." So much for banishing the money changers from the temple. But this isn't the only place where Jamie Dimon channeled images from the past. The famous PR man for John D. Rockefeller, the somewhat less famous Ivy Lee, had encouraged the once richest man in the world to engage in certain acts of philanthropy as a means of cleaning up his image. One of these was handing out dimes to children on the street. We found it striking that Jamie Dimon talked about philanthropy and charity during his Q&A to the good folks over at the CFR yesterday. It is laughable, of course, since what passes as philanthropy in his mind is really just a reshuffling of a fraction of the money that we have unwillingly put at risk in order to backstop unrealized losses for him and his bankrupt counterparties. At least Rockefeller was actually giving away dimes to children. In the case of Dimon, he is picking the child's pocket of a dollar, and handing back a doctored penny in return. So much for progress...Lauren and Demetri discuss this matter and more on today's "Loose Change." Stephen Leeb: the Missing Presidential Debate on Trickle Up Economics & the Energy War Welcome to Capital Account. The global rate cutting contest continues with two central banks reducing interest rates in the past 24 hours. The Central Bank of Brazil and the Central Bank of South Korea lowered rates by a quarter point, while China continued its easing policy to offset tight liquidity conditions. We talk to Dr. Stephen Leeb, chairman of Leeb Capital Management, about the impact of global loose monetary policy on commodity prices. Plus, tonight is the only Vice Presidential debate of the 2012 Presidential elections featuring Paul Ryan and Joe Biden. As pundits talk about "what's at stake" tonight, we ask if there is a dirty little secret no one mentions? Our guest, Stephen Leeb, weighs in on the bigger picture; resource and energy issues you aren't likely to hear in the US Vice Presidential debates. For years we have been told that wars in the Middle East, the Persian Gulf and other oil rich areas, are for security. We have been told that bailing out the biggest banks is about protecting Main Street from a financial fallout on Wall Street. We have been told that the Fed's purchases of mortgage backed securities will help homeowners and the economy, creating jobs and spurring employment. Is any of this true? If US wars were driven, in part, by a need to secure a depleting resource, oil, why wouldn't the government be spending that money on alternative energy at home? If bailouts were about stemming the economic crisis, why not bail out the holders of fraudulent mortgages? If the Fed wanted to help homeowners, why wouldn't they set up lending facilities as they did with the banks, lending directly to indebted households and mortgage holders? We talk to Stephen Leeb, author of the book "Red Alert", about the narrative given to the America public, and large industry, including big banks, oil companies, and military contractors, who want to preserve the status quo. Also, Christine Lagarde, Managing Director of the IMF, said Greece should be given an extra two years to meet its budget targets. What is driving high-level leaders to make sure Greece stays in the Eurozone? We ask Stephen Leeb if Greece is better off in the Eurozone, and continuing to service its debt, or is it better off out? And will we see criminal charges for actions surrounding JP Morgan's multi-billion dollar trading losses? Federal authorities are using taped phone calls to build criminal cases, according to Dealbook. Yesterday, Jamie Dimon, speaking about the London Whale losses, said "Punish us for our mistake, which was a shareholder mistake, it didn't cost anyone else any money." Really? It doesn't cost us to subsidize a TBTF bank, running enormous risks and realizing huge losses whenever you feel like it? In today's "Loose Change," we have a mash up of Jamie Dimon's best moments from yesterday's CFR press event.

CapitalAccount 10/10/2012 - Nigel Farage on the Rise of UKIP, the Fall of Europe, and the Parallels for the US , Capital Account asks Jamie Dimon about the Failed Bear Stearns Acquisition at the CFR!

Nigel Farage on the Rise of UKIP, the Fall of Europe, and the Parallels for the US Welcome to Capital Account. Nigel Farage is a UK politician with a strong US following. He has seen his own party, UKIP, grow from a fringe faction to a viable mainstream alternative. By turning his European Parliamentary position into a bully pulpit for a growing movement of euro-skeptics, he has managed to ride an alternative political wave sweeping across the Atlantic. And many of his speeches before the EU have gone viral on the internet, particularly on the financial blogosphere in the United States, making the man and his United Kingdom Independence Party a force to be reckoned with. Nigel Farage joins us in studio to discuss all this, as well as what happens behind the scenes of Europe's Parliament and give us a sneak peak at his relationship with other MEPs behind the new iron curtain! Also, the IMF said Europe's banks may need to sell as much as 4.5 trillion dollars in assets through 2013 if policy makers fall short of their pledges to curb the crisis. This is 18 percent more than previously estimated. The failure to implement fiscal tightening could force EU banks to shrink assets, according to the IMF, and this painful deleveraging might crimp growth. We talk to Nigel Farage, leader of the UK Independence Party and Member of European Parliament, about how much pain is still left in the Eurozone. We ask him if he has been surprised at all, by the resilience of Eurozone leaders in their resolve to keep the monetary union together, and if he see's a timeline for a Grexit, a Spexit, and perhaps even an exit of France from the Franco-German Pact! And Jamie Dimon was in Washington today, speaking at the Council on Foreign Relations. We are weeks away from the one year anniversary of MF Global's collapse. Since JP Morgan was a major counterparty and custodial bank of MF global, Capital Account tracked Jamie Dimon down to ask him about what he knew in the weeks before the broker's collapse. We also took him to task on the Bear Stearns acquisition and the civil fraud suit. Stay tuned to find out what he said at the end of the show! Capital Account asks Jamie Dimon about the Failed Bear Stearns Acquisition at the CFR! JP Morgan CEO Jamie Dimon, said the bank did the Federal Reserve a "favor" by acquiring Bear Stearns in 2008 and that the bank has lost up to 10 billion dollars related to its acquisition through litigation, write downs, etc. Jamie Dimon was in Washington D.C., at the Council on Foreign Relations, where Capital Account segment producer Justine Underhill asked him if he now regretted working with the Fed to acquire Bear Stearns. Specifically, the New York Attorney General's filing of a civil lawsuit alleging fraud related to mortgage securities at Bear is what sparked the market's concern. Below we have some of Jamie Dimon's response: Dimon said JP Morgan Chase was asked by the government to buy Bear Stearns "at great risk to ourselves." When asked if he would reconsider acquiring Bear Stearns knowing what he knows know about the company, Jamie Dimon said: "it's real close," and said that his board wouldn't let him. Dimon said the 10 billion dollars in Bear-related losses can be put in the "unfair category," adding that he "thinks the government should think twice before they punish businesses every single time something goes wrong." Here's the Q&A from the press conference with Dimon's attempt to settle the score.

Financial War in Iran, Riots in Greece and Jobless Conspiracies in the US!

Welcome to Capital Account. The IMF lowered growth forecasts and warned of a world-wide recession in its World Economic Outlook report. This was the IMF's bleakest assessment of global growth prospects since the 2009 recession, according to the Wall Street Journal. Is the IMF late to the party? It upgraded growth prospects for only one major nation from its previous forecast: the US! Did the IMF take into account that the US is in a QE induced coma? We talk to Mike Shedlock about the meaning behind the IMF's report. Also, the US jobs numbers released by the BLS last week are still making headlines. The downturn in the unemployment rate during the election season prompted some high profile people, such as former GE CEO Jack Welch, to suggest that President Obama's team manipulated the data. Our guest, Mike Shedlock, Investment Advisor for Sitka Pacific Capital, is here to dispel the conspiracy theories around the drop in unemployment. In 2003 Austan Goolsbee, who later became an Obama aide, argued that in previous economic downturns "the unemployment rate has been low only because government programs, especially Social Security disability, have effectively been buying people off the unemployment rolls and reclassifying them as not in the labor force.'' He cites the loosening of the standards to qualify for disability payments in the 1980s and 1990s as a reason for the increase of those in the disability system, a form of 'invisible unemployment.' The trend of rising disability insurance has continued in this recent economic downturn. We talk to Mike Shedlock, author of the popular blog Mish's Global Economic Analysis, about factors that cloud and complicate the unemployment picture. Plus, Angela Merkel is in Athens offering words of support for her Greek counterpart. Talk is cheap, far more expensive are the conditions for more bailouts and debt write-downs! Words of support don't pay the bills or reignite a stalled economy. Lauren and Demetri look at how the mainstream media has misrepresented the problems in Greece. Also, Iran faces hyperinflation...or does it? Lauren and Demetri discuss the economic impact of sanctions and price controls in today's "Loose Change."

Joe Biden's Pre-Debate Gaffe meets Jon Corzine's Orange Jumpsuit w/James Koutoulas!

Welcome to Capital Account. The first US vice presidential debate of the 2012 presidential race is a few days away. During the 2008 Obama administration's post-election transition, Biden called former Senator, Governor, and CEO of Goldman Sachs and MF Global, Jon Corzine, for advice. Corzine was at the helm of one of the largest bankruptcies in US corporate history: the bankruptcy of brokerage firm MF Global. Customer money is still missing from MF Global and not a single person has been held accountable. It was a year ago this month that the brokerage collapsed. We welcome James Koutoulas, co-founder of the Commodity Customer Coalition (CCC) and CEO of Typhon Capital Management, back onto the program to give us a long over-due update on MF Global, Jon Corzine, and the status of that 1.6 billion dollars that so popularly "vaporized." Vaporized indeed. Many contend that customer money was actually stolen to meet margin calls on Corzine's risky European bond trades after the firm's credit rating was downgraded. Others believe that these funds were being used on a regular basis to cover margin calls months in advance of the firm's collapse. Gary Gensler, former Goldman Sachs banker, recused himself and the CFTC from handling the bankruptcy, letting SIPC handle it instead, even though there were only 100 million dollars in securities accounts versus $6.4 billion in futures. We tell you about the safe harbor provision that allows derivatives to cut the line in bankruptcy court. We break it down in Word of the Day! And last but not least, the Merchants of Venice want to secede from Italy. Lauren and Demetri banter about the latest calls for independence from Italy by Venetian separatists in "Loose Change." Indipendenza Veneta, a newly-founded pro-independence movement, held a rally in the ancient city on Saturday, calling for an urgent referendum to be held on the issue. Separatists want to carve out a new country in north-eastern Italy which would comprise Venice, the surrounding region of Veneto and parts of Lombardy, Trentino and Friuli-Venezia Giulia. The "Repubblica Veneta", as it would be known, would encompass about five million people. A poll conducted by Corriere della Sera in September found that 80 per cent were in favor of independence.

Word of the Day: Safe Harbor

Given our discussion about MF Global with James Koutoulas, the word of the day is Safe Harbor. So what exactly is Safe Harbor? Safe Harbor protections in the Bankruptcy Code include: Provisions that protect nondebtor counterparties from the normal course in bankruptcy. Many transfers of cash or securities made in the final weeks before a bankruptcy, for example transfers used to meet margin calls on OTC derivatives, are not subject to clawbacks, as long as the parties involved claim they had no knowledge of fraud. Let's take a look at one of the ways it has been used: In the case of MF Global, when more than 1.6 billion dollars of customer money went missing from customer accounts, one would assume that the money would go back to the customers once properly discovered right? Not necessarily under the safe harbor provisions. Companies that received hundreds of millions in transfers of MF Global customer funds in their final days may simply get to keep that money! And they would be within their legal right to do so! Also, any collateral MF Global posted with counterparties before the bankruptcy, those counterparties may get to keep! These assets are beyond the reach of creditors. This would be as if you bought a car you didn't know was stolen, and when the owner of the car came to take back the car, the Safe Harbor would be used to protect you from having to return the car to its rightful owner. So, unlike what would happen to ordinary citizens outside of their dealings with banks, creditors and customers can sail into safe harbors when they are dealing with stolen assets by saying they didn't know they were stolen. The Safe Harbor provisions are supposedly intended to avoid a financial ripple effect, where a large firm's bankruptcy infects the market as a whole by providing immunity to other market entities. However if counterparties are not incentivized to perform due diligence on each other, and instead rely on the ability to liquidate the other's collateral upon bankruptcy, a large counterparty failure easily leads to a fire sale of all posted collateral. So much for the systemic risk argument! The provisions were first introduced into the Bankruptcy Code in 1982, in a very limited manner, safe harbors have since been expanded over the years, most recently in 2005 as part of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The 2005 act extended safe harbor provisions to include repo and swap agreements, in addition to futures contracts and securities agreements. And who were some of the biggest lobbyists for this act? Bank of America, CitiGroup, JP Morgan, Merrill Lynch, and the American Banker's association. These 5 entities spent over 6 million dollars to get this bill passed. The poorly named Bankruptcy Abuse Prevention and Consumer Protection Act arguably neither prevents abuse nor protects consumers. And the big losers today may be customers who are trying to recover funds such as those at MF Global that sunk with the ship and are in a so called safe harbor. And now you know what it is.

How High-Frequency & Algorithmic Trading open the Floor for a Flash Crash

This is a Capital Account, web-extra from our Thursday, September 27th interview with former NYMEX board and executive committee member David Greenberg; a 25-year veteran crude oil trader. David lectures at major universities around the country and is a frequent guest lecturer for the finance program at both Hofstra University and the Whitman School of Management at Syracuse University. He also teaches a course on the transition to electronic trading at the Museum of American Finance. In this web-extra, David Greenberg (www.greenbergcapital.com) breaks down exactly how and why algorithmic trading can create price vacuums in markets that, given the right of circumstance, could create dramatic price drops unlike anything that one could expect to see in a market where sell and buy orders are filled by humans and not machines. The Flash Crash of March 2010 is a perfect example.

Chris Martenson on what Job Numbers, the Fed, and a Drop in Oil Prices are Hiding!

Welcome to Capital Account. The ECB plans to use its unlimited bond buying program, known as OMT, to buy sovereign bonds for one or two months and then suspend purchases during an assessment period, according to Reuters. Attempts to reflate the global credit supply have truly reached new levels. The central bank has gone from traditional monetary policy of setting interest rates, to buying US treasuries and government agency debt, to then buying mortgage backed securities to bolster the housing market. All this is done under the guise of the Fed's "dual mandate" of promoting full employment and price stability. And yet, the only thing central bankers have managed to achieve as they break the laws of physics is to inverted time and space and suck whatever duration is left out of the bond market. To help us contemplate life after the death of interest rates and the credit system, we talk to Chris Martenson, author of "The Crash Course." Among other things, we ask Dr. Martenson how he thinks the issue of credit expansion is compounded by global energy resource depletion and population growth. Meanwhile, August consumer credit rose more than forecast according to the Fed. The 18.12 billion dollar rise, the most in three months, was driven by borrowing for education and automobiles. We ask Chris Martenson, if this a sign that the credit bubble is reflating or if we are we past the deflationary point of no return. And the unemployment rate dipped to 7.8 percet, with a massive 873,000 jump in jobs reported by the household survey, the largest gain in almost a decade. However most of the job gains were involuntary, part-time positions. We talk to Chris Martenson about what the numbers really mean and how to factor in exponential population growth as an unaccounted for headwind to employment going forward.

Senator Alan Simpson on the Deficit Cutting "Stink-Bomb" in Congress' Garden Party!

Welcome to Capital Account. Simpson-Bowles, Obama's bipartisan deficit commission of 2010, has become a political football in the Presidential race. In attempts to score political points Mitt Romney, Paul Ryan, and Joe Biden have flung it around in recent speeches and interviews. We talk to Former Republican Senator and co-chair of the Simpson-Bowles commission, Alan Simpson about how he and his co-chair propose to fix the deficit. Plus there is more evidence the US economy is slowing down as the August US housing starts number was below analysts' expectations. Also mortgage lending in 2011 declined to its lowest level in 16 years, according to a report from Federal regulators. Moreover, FedEx, an economic bellwether, cut its global growth forecast. How do you sell US deficit reduction as a top priority in this environment? We talk to Alan Simpson about the US national debt and the fiscal cliff. And the UK city of Bristol launched its own coinage and it has become the UK's largest alternative to sterling. Lauren and Demetri talk about alternative currencies in today's episode of Loose Change.

"QE to Infinity and Beyond," says Mike Shedlock! - Word of the Day: Exchange-Traded Fund (ETF)

Welcome to Capital Account. Today we talk about "foot-in-mouth" disease, given Mitt Romney's recently exposed comments stating that 47 percent of voters "believe they are victims" and are dependent on the government. It seems the "foot-in-mouth" indicator is as important as the economy in this Presidential election. Even though this appears to be a bearish indicator for Mitt Romney, we ask our guest, Mike Shedlock, if there is a bullish case for the economy when it comes to either the Republican or Democratic Presidential candidate. And what is the true state of the economy? We talk to Mike Shedlock, Investment Advisor for Sitka Pacific Capital, about indications that the US is in recession. Also, Mike Shedlock, author of the blog Mish's Global Economic Analysis, tells us about his top ten list of the most dangerous politicians in Europe. Plus, according to a report posted on the NASDAQ's website, investors plowed more than 15 billion dollars into ETFs last week in anticipation of QE3. What exactly is an Exchange Traded Fund, and more importantly, what is in the fine print? We break it down in Word of the Day. Also, GE's medical imaging healthcare business is slowing down, but is this partly because of changes GE made to the health plans of its own workers? Lauren and Demetri talk about it in today's Loose Change. Word of the Day: Exchange-Traded Fund (ETF) Time now for Word of the Day where we break down a financial term for our smart viewer but maybe not the financial expert. Today it's ETF or Exchange-Traded Fund. By attracting those looking to invest in nontraditional assets and sectors, the global ETF market has inflated to more than a trillion dollars in assets over the past few years...some put that number now at about 2 trillion dollars. David Kotok wrote a book on ETFs and spoke about them on our show recently. However, Kotok warns that investors should conduct serious research before purchasing shares in an ETF. We'll explain why shortly, but first, what exactly is an Exchange-Traded Fund (ETF)? Here's our definition: ETFs are a portfolio or basket of securities, which provide diversification like mutual funds, yet are unique in that they trade on an exchange just like a common company stock. They usually track an index, either holding the underlying stocks of the index or using derivatives to achieve the same returns as the index. And since an ETF is designed to track a specific market index, one can play an entire sector without being forced to stomach the volatility inherent in any one stock. For instance, investors can gain exposure to precious metals using ETFs. Specifically, Gold and gold miner ETFs have become increasingly popular. But if you buy shares in a gold ETF like the GLD for example, the largest gold ETF in the world, do you actually own gold? The answer is NO. You are effectively buying shares in a fund indexed to the gold market. This is not the same thing as buying physical gold bullion and storing it in allocated vaults, a key distinction. In fact, according to the ETF's own prospectus, the average investor can only redeem his or her gold shares for cash. Only those who have large holdings in a fund like GLD have the option to redeem their shares for physical gold, requiring somewhere in the neighborhood of 100,000 shares, which translates into millions of dollars. And even then it's a complicated process. Also, in the case of GLD, the Trust does not insure its gold. Which means it may not have adequate sources of recovery if its gold is lost, damaged, stolen or destroyed. And this may surprise you when reading the prospectus as we have. According the prospectus for GLD: "The amount of gold represented by the Shares will continue to be reduced during the life of the Trust due to the sales of gold necessary to pay the Trust's expenses irrespective of whether the trading price of the Shares rises or falls in response to changes in the price of gold." And... "Gold held in the Trust's unallocated gold account and any Authorized Participant's unallocated gold account will not be segregated from the Custodian's assets. If the Custodian becomes insolvent, its assets may not be adequate to satisfy a claim by the Trust or any Authorized Participant." So if the custodian- in this case HSBC- runs into trouble, it may not be able to make good on your claim. So it would appear the only way to protect yourself as an investor when it comes to ETFs is to do detailed research on the fund, its assets, and carefully read its prospectus, and even then you are still dealing with counterparty risk. This is why some would argue that buying a gold liability, which is what a gold ETF is, defeats the purpose of owning gold in the first place, as precious metals are one of the few asset classes accessible to average investors that are not simultaneously another person's liability. In any case, now you know about ETFs and if you're interested, you know to get your reading glasses ready to dissect the fine print.

Defining Libertarianism and Austrian Economics with Walter Block

Welcome to Capital Account. The US Treasury declined GM's offer to buy back 200 million of the 500 million shares the US currently holds, according to the Wall Street Journal. In 2009 GM received a $50 billion dollar bailout from taxpayers. Now, GM executives upset over pay restrictions and the stigma of "Government Motors," want to buy back shares at a price that would cause taxpayers to lose billions of dollars in the deal. Can anyone argue we still live in a capitalist society? Also, today marks the anniversary of Occupy Wall Street. Organizers planned nonviolent civil disobedience actions around the issues of 'Corporatocracy.' A year later the issues seem just as relevant. We talk with Walter Block, libertarian philosopher, professor, and Austrian economist, about how address the points brought up by the Occupy movement. On this show we have guests from both sides of the political spectrum who agree with the complaints of the Occupy movement. Investors who hail from ranks of the 1% have identified with protesters over issues such as corporate welfare, bailouts, and too big to fail. Post-Keynesian economist, neoclassical debunker and economic professor Steve Keen spoke to protesters about the failings of the economics profession, occupying the classroom, and he advocates QE for the masses. Our guests do not all share the ideological framework. We do not all have to agree with every tenant of an ideology or belief system in order to adopt some of its principles, or at least to understand them. It is important for people to keep an open mind. As discontent with the established political parties intensifies, we see growing interest in alternative frameworks and ideologies, such as Libertarianism. We talk to Walter Block, Chair of Economics at Loyola University New Orleans, and author of Defending the Undefendable, about the difference between Libertarianism and Austrian economics and how free enterprise has been misunderstood.

Deficit Spending and the "Coercion-Backed Greenback" with Edward Harrison

Welcome to Capital Account. US consumer prices rose in August by the most in three years. The Consumer Price Index increased .6 percent, with gasoline prices accounting for 80 percent of the rise. But should we even believe government statistics? And how does QE fit into the inflation calculation as central banks try to reflate asset prices? Marc Faber, Gloom Boom and Doom publisher, lays out his case for a deflationary collapse. We play the second part of our interview with him from yesterday's show in the second half. And yesterday, as the news of QE overshadowed all other financial news, a 500 billion dollar spending bill easily passed in the House. The spending package aims to fund federal operations until March. Meanwhile, the US government has borrowed nearly 35 cents for every dollar it has spent this year according to the Wall Street Journal. Lawmakers hope to address spending after the election. We talk to Edward Harrison, founder of Credit Writedowns, about the dangers of deficit spending. Also, since the Fed is targeting depressed housing prices with its MBS policy, we play the game "Economic Symptom or Disease?" The Federal Reserve is trying to treat this symptom with QE, instead of addressing the disease of the high debt - debt that keeps people from buying homes or getting out of them. We talk about this new game show idea in Friday's Viewer Feedback.

Marc Faber on Hedging the Bernanke Put and QE3 with Gold, Land and Equities!

Welcome to Capital Account. The Fed gave the QE-addicted markets another dose of its stimulus drug today as it announced another securities purchase program. The Fed launched an open-ended program to buy $40 billion in mortgage backed securities each month, a program that will continue until the labor market improves. The Fed also committed to record low interest rates even after the economy strengthens. To what end will the Fed pursue this accommodative stance? In response to this action gold climbed to a six month high. Marc Faber, Gloom Boom and Doom publisher, has said that he will not sell any of his gold as long as people like Ben Bernanke are running the world's central banks. We ask Dr.Faber about his near term outlook for gold, and what he thinks of Ben Bernanke's monetary policy. Also, an editorial from Xinhua, the official Chinese news agency, warns that massive spending to boost China's economy could be detrimental. How does this effect China's growth or slow down? We ask Marc Faber, founder of Marc Faber limited and author of the book "Tomorrow's Gold," about likelihood of a contraction in China and other Asian economies. Plus, in today's episode of "Loose Change," Lauren and Demetri discuss the reports of Jon Corzine's meeting with officials from the Department of Justice last week, ten months after MF Global failed.

The Sources of the Euro Crisis and the EU Superstate with Godfrey Bloom!

Welcome to Capital Account. Germany's Constitutional Court ruled the Eurozone's permanent bailout fund, also known as the ESM, does not violate the country's laws. Reportedly, there is some ambiguity in the ruling that could beget more political wrangling. Lauren speaks with Godfrey Bloom, Member of the European Parliament and the UK Independence Party, about what motivated the court's decision and the problems that lie ahead for the European Union. Meanwhile, the European Commission president Jose Manuel Barroso, in his State of the Union address, called for a federation of nation states (a European Superstate) and unveiled plans for the ECB to supervise all Eurozone banks. But was it the lack of a centralized banking regulations that contributed to the debt crisis or is this really about something else? We ask Godfrey Bloom if integration is really the solution to the EU's problems. And despite attempts at integration and consolidation in the EU, there are more signs of fracture. While Spanish leaders delay decisions on seeking an ECB bond bailout, the crisis fuels the independence movement in the Spanish region of Catalonia. Could this be one of the ironies of integration? Plus, in today's episode of "Loose Change," Lauren and Demetri discuss Apple's latest announcement: the iPhone 5. According to Reuters this gadget won't just benefit the tech world, it could boost our economy too!

David Kotok on EU Fireflies and a Market Rehab for Easy Money!

Welcome to Capital Account. The headlines today tell two different narratives about the US stock market. According to Bloomberg, stocks "advance ahead of Fed decision," but according to the Financial Times, the "rally loses steam ahead of the meeting." Whether you believe the headlines or not, they underscore the impact of macro-trends on the markets today. Our guest, David Kotok, of Cumberland Advisors, explains why the markets are addicted to QE and the consequences of this dependence. Also, tomorrow the German Constitutional Court is expected to rule on the constitutionality of the ESM, a vote that is viewed as key to the Eurozone's future stability. David Kotok, chairman of Cumberland Advisors, will explain why this action in Europe can be summed up in a single dance: the "dance of the fireflies." He joins us to shine light on the situation. Plus, what does the growth in Exchange Traded Funds, or ETFs, indicate about a shift in investment trends? We talk to David Kotok, author of the book, "From Bear to Bull with ETF's", about the role of ETFs and the future of the market. And in today's episode of "Loose Change," Lauren and Demetri discuss RGBAnarchy's latest video that features Ben Bernanke and Paul Krugman drowning in the paper of their own creation!

How the Market Can Cure the Health Care Crisis w/Dr. Keith Smith!

Welcome to Capital Account. Republican presidential candidate Mitt Romney raised eyebrows yesterday when he said he would "not get rid of all of healthcare reform." Romney's statement made headline news because it differed from his previous rhetoric of "repealing ObamaCare." We would rather hear politicians explain the real reasons for why a trip to the ER for a headache can amount to a bill of $10,000. Could it be that healthcare isn't actually that expensive? Over the years healthcare costs in the US have increased from 5% of GDP in the 60s to 17.4% in 2009, according to an OECD report published in 2011. A recent report from the Institute of Medicine calculated systemic waste in the US healthcare system at $765 billion, representing 30% of total expenditures. We ask Doctor Keith Smith, Managing Partner and Medical Director for the Surgery Center of Oklahoma, about the role of insurance companies, wasteful administration costs, and hospital inefficiencies. Keith Smith runs an independent surgical clinic and brings free market competitive prices to surgery. He offers customers lower prices and patients fly in from all over the world, even from countries with universal healthcare systems, to get surgery at his center. And in today's "Loose Change," Lauren and Demetri discuss former Reagan Budget Director, David Stockman, recent appearance on CNBC. Specifically, Stockman's comment that "Ron Paul is the only one who is right about the Fed, and the Fed is the heart of the problem." Indeed!

Mixing Oil and Water w/Lindsay Hall and Stephen Leeb!

Welcome to Capital Account. The jobs report released today reiterates a grim situation for millions of unemployed Americans. The jobs number was below expectations again: the economy added 96,000 jobs while analysts expected 130,000. The unemployment rate fell from 8.3% to 8.1%, however this drop is most likely due to a fall in the labor force participation rate. Meanwhile stock markets appear more than eager to grasp the hand of dovish central banks. Stocks rallied after the ECB announced its unlimited bond buying program yesterday. We talk about it. Also, China has reportedly approved plans for $158 billion in infrastructure spending. China's growth is slowing and analysts are concerned about slumping iron ore prices, a gauge of industrial production. We talk to commodities expert Steven Leeb, Chairman and Chief Investment Officer of Leeb Capital Management, about what effect this stimulus might have. We also discuss the effect that marginal cost increases have on commodities more broadly, and the important role that water scarcity plays in all of this. Plus, at the DNC Barack Obama spoke about a path where the US reduces its dependence on foreign oil and takes more control of its own energy future. Administration officials met with oil market experts yesterday as they consider the release of Strategic Petroleum Reserves. We talk to Lindsay Hall, Chief Market Strategist for the RMB Group (http://www.RMBGroup.com), about why she still anticipates higher prices for oil despite economic slowdowns in China and Europe and SPR injections. We also ask her about the Japanese Yen, and what she thinks, as a FOREX trader, about where the currency is headed in the near future.

Regaining your Economic and Financial Independence w/Kung Fu Finance Girl!

Welcome to Capital Account. Today, European Central Bank President Mario Draghi announced a bond-purchase program in the euro zone with no set limit. But why should you, who may be thinking about your future and your retirement, care about Super Mario's latest policy response? Our guest Susan Fujii editor-in-chief of Kung Fu Finance and an SEC accredited investor says you can't afford to ignore the macroeconomic landscape if you are trying to protect yourself in this new economic environment. She joins us to explain why. Plus, Senate Candidate Elizabeth Warren had some tough words for Wall Street CEOs in her DNC speech last night, saying that despite wrecking the economy Wall Street Bankers "still strut around Congress," demanding favors from lawmakers. But is it a little naive to think that the candidate you elect president or into any office for that matter will really change this situation? We think this is a bit naïve to say the least., and this is one example of the problem with political rhetoric when it comes to finance and the economy. If you believe the rhetoric and think everything will be fine, or believe that you can trust political institutions to take care of you, you may not do so well. Susan Fujii, investor and editor-in-chief of Kung Fu Finance makes the case for financial independence versus financial dependence to the government or your employer. To give you just one example of why this should be on your mind...the United States Treasury Department this week announced the US national debt has surpassed $16 trillion. But how exactly are we supposed to wrap our heads around this? Millions, billions, and even trillions are bandied about as though they were pocket change, but can we really conceptualize what those numbers amount to? And the questions are unanswered as to what happens when interest rates rise and the government has to pay more toward interest and less towards other things? What happens if the globe loses faith in the currency? It's these kinds of questions many of our viewers ponder quite regularly, especially when it comes to figuring out what kind of safety net exists for them during these very unstable economic times. And so, our guest has made it her mission to help individual investors figure out how to build their own safety net and save themselves. Susan Fujii, editor-in-chief at Kung Fu Finance, tells us how. The immediate actions she believes individuals can take include investing in physical gold, keeping some cash on hand (something to use to buy assets if they go on sale!), and using trailing stops to avoid any major losses on your investments.