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In our money -- segment today while US markets were closed for Martin Luther King Day another big downgrade shaking Europe.
Just how bad is this European crisis and what could that mean for our economy we're joined by -- Thousand former vice president Lehman Brothers and author of a colossal failure got a sense that.
And at the truth about the Lehman collapse and William Friday was CEO of Greenwich financial services and author.
On another -- -- way too big to fail and we can talk about a lot of companies would regard that but first of all Larry.
Is what's happening over -- gonna lead to another bail out here.
Not a bailout but you know we might have some risk points here in the first quarter.
This private sector involvement in Greece where they need the bondholders to agree to extend the maturities.
And lower the coupons.
You know the negev maturity.
On in March.
March 20 it's about 25 billion or so what's the biggest Greek bond maturity and that would hadn't if you over year and a half.
But if the worst happens -- to -- -- there -- the worst happens over there.
How does -- translate over here if the worst happens and there's an un organized the -- as there was with Lehman.
You -- the really worst case there -- we go in a recession here in this.
It's that -- well bill the fact is there a lot of people waiting in the wings -- I'm sure if the worst does happen would advocate a second God's sake.
Well the first one work the TARP bailouts work so we -- because most of those banks paid back the money.
It created -- saved us from absolute financial -- would -- be wrong.
First -- -- I I we take exception at the first bailout worked.
Because we have not yet fixed any of the banking problems in this country if we did we would not have Bank of America trading at five dollars a share.
As it -- now about 650 but how -- safety but it broke five dollars two weeks ago.
Which you essentially have the is the government has kicked the can down the down the road.
In -- in an effort to hopefully.
Have a closet bailout of the banks we've done this through the Fed we've done -- through.
Investors not pursuing their contract rights and there's a tremendous liability that the banks have.
If the investors and if the government were to pursue their claims against the banks and banks would have massive -- of problems and likely result in at least one failure.
Larry I'm inclined to agree with bill that the last for all the talk in -- finance committee about how all we we save herself through another great depression and the banks have paid -- back and everything.
A lot of the stuff was just to -- what we were four and a half years after TARP.
And finally Bank of America is is talking about cutting down some of its branches.
This is something they should have been talking about four and a half years ago but they didn't have to because they had all led infusion of capital that's way -- see -- -- MI offer not well in terms of in terms of whether the bailout worked -- You know they weren't.
There's so much debate over -- -- long term if -- true laissez Faire capitalists.
Which you know I'm a group that's what I'd probably say let them all fail but educationally and Brothers they let our bank fail so may mean.
But -- -- know many issue now there are -- there are damaging things they did but aren't these two banks as it has the title bill's book aren't they wait too big.
As it is right now no question of the bottom line is with Dodd-Frank.
And -- and lecturing about this around the world -- going to be in south African a couple of weeks but.
Dodd-Frank is only about its but two to would have fuse old and it's only about 20% implemented.
In the part around.
The unwinding -- -- -- in other words the real part within Dodd-Frank the part.
Of having an organized unwind that part is nowhere near being implemented so.
Bills right in the right -- too big to -- still exists.
And the only way to fix it is -- -- despite getting Dodd-Frank to move faster what scares you the most what's the scenario that scares you the most right now.
A default in Europe where the credit default swaps.
Are where the banks -- have shorted the various credits.
In the credit default swap market and we don't know how large that exposure risk is that -- you're -- it is a little -- -- jargon here but -- -- something like what happened with AIG where in fact that was that was a -- it was a lot bigger and exactly exactly so Greece.
Has a certain amount of debt outstanding in the banks have magnified that exposure on their balance sheets by selling more Greek debt -- actually exists and they do so -- sympathetically and as as Larry just forecast if the first happens could that lead to another recession or maybe even something worse here as well -- that absolutely.
And it would also depend on how the government reacted to it.
If you look at the way the Europeans have reacted they've taken over a large number of banks over there the German land banks have been taken over -- he has been taken over Fortis has been taken over.
And they they take them over -- -- split them between good bank in a bad bank let's hope it doesn't have here are two very Smart man with two great books wait too big to fail is bill Fries book it is available on Amazon and of course Larry McDonnell colossal failure of common sense continues to.
Break all the records thank you guys -- up let's hope your worst forecast don't come true.
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