This is casting around the globe and covering the world of business and finance and impact upon us im christi i. Know in washington here is a look at whats on the today show joyce and then continues to slash jobs as part of its restructuring could there be an eerie pattern unfolding nailer a Public Citizen is on hand to sort through whats in store for the banking behemoth. In the wake of the constant Terror Threats auto exports from mexico to the states have spiked lauren fix the car coach joins us today to break down the boom of cars coming across the border we have packed show today i thought lets go and dive right in. A legal fight that could such major global precedence on down to sharing and privacy leads our global report today as the Irish Data Protection Commission takes a case against facebook to the European Court of justice on tuesday the. The top court of the European Union began hearing a case that began with revelations that a u. S. Spy agency the National Security agency was compelling facebook and Similar Companies to turn over private data from users in the e. U. The 11 specific questions that spun out of that case are now before the court and center on the rules that govern Tech Companies sharing data from users around the world socalled standard contractual qualities or c cs if the e. C. J. Finds that as he sees fail to protect the privacy rights guaranteed by e. U. Laws Companies Like facebook and its peers could be forced to sequester that lucrative trove of european consumer data and rewrite their rules for sharing what is arguably their most valuable resource a decision from the court is expected before the end of this year. Catching up with africa 54. 00 of 55. 00 leaders attending the recent African Union summit in nigeria has signed an agreement to create the african Continental Free Trade Area the proposal under discussion for 4 years advanced after Regional Power nigeria was convinced to support it. As one of the remaining holdouts on the continence agreement which would eliminate most tariffs has been ratified in the National Parliaments of about half of the African Union members the unions trade and industry commissioner predicted that the area would become operational by july of 2020 they gathered elders also advanced plans for pan african Payment System to maximize efficiencies within the trading bloc and reduce trade barriers created by the region scarcity of foreign exchange. And japan has launched another round in the back and forth with south korea over new restrictions on export materials used in semiconductors and smartphone displays japanese trade and industry minister here is shogi seiko said tokyo was quote not thinking at all of rolling back the restrictions on exports of 3 men their minerals says seoul after south korean president moon j. In a war. Warned of countermeasures if they were to affect the careers Tech Companies. Go spoke about the situation during a News Conference tuesday to kind of i think this is extremely dependent on the south koreans to sponsor naturally there is a possibility of the expansion of export controls are properly done situation they will latch on to their new size should. Not exist it should feel now a mystery or they sure. Dont like other usual giuliani so i cant help but think what problems there are. There is absolutely not a financial measure in. Doing your banks message to the world is that they are undergoing a restructuring a routine restructuring like the ones that have happened every quarter for the past few years in order to return the business to profitability and this current iteration d. B. Is attempting to shed its Equities Investments its trading business and shift over to primarily a lending business now on the surface this move makes perfect sense but lets dig a little deeper remember when bear stearns underwent a restructuring translation things are in a full on crisis mode now the debts of Lehman Brothers and bear stearns were quick and painless but the coming the rise of Deutsche Bank has been long drawn out and very painful and recent times davies Investment Banking division has been among the largest in the world comparable to goldman j. P. Morgan and they have led book writers in notable i. P. O. s such as go daddy and aston martin and ali baba and more but today with the stock trading at 7. 00 per share that is down 95 percent from its peak in 2007 the lowest its ever been in his 150 year history the bee is in an irreversible death spiral and this restructuring is too little too late now this was an interesting quote from miles edwards yesterday. Actually view it interesting a lot more like a bear stearns and a lehman because on. Its nothing growth they still have some call ability. Some really terrible decisions which are scaring off institutional and hedge funds. So now lets take a look at some of these bad decisions in october of 2015 davey and now its a restructuring after being hit by a record fine for 2500000000. 00 for the library scandal they then record a record loss of 6800000000 for 2015 and then the ex cel soran tells everybody that the company is rock solid in 2016 in march davy disclosed the notional value of the derivatives on its books to be 54. 00 trillion euros the baron bird bank then warned that t. V. Is over 40 times leverage the Federal Reserve bank came out and said that t. V. Failed the fed stress test 3 times in the last 5 years and 2018 was involved in a Money Laundering scandal with danske a bank then in april of 2019 the German Police raided d b over tax evasion charges mounting up to a 1000000000 euros and then also in the 1st quarter of 2019 davies hail mary attempt at a private bailout by commerzbank failed as merger talks collapsed now this collapse of deutsche has been predictable so it comes as no surprise to industry players its top shareholder airlines cut exposure from 10 percent and dump shares running for the exit the 7th Largest Hedge Fund in the world and t. V. s biggest prime brokerage client closed out counterpart exposure and also moved on so what scared them well it could be massive direct exposure 43 trillion euros of estimated derivatives on the books in 2008 derivatives played a big role in the financial crash in the form of collateralized debt obligations and betting on top of these Financial Assets people basically made bets on the market and people made bets on top of those bets and it turned what originally was a few 1000000000 dollars of assets into a few trillion dollars. And thats exactly what happened to george a bank here balloon 40 trillion dollars off of only a few 1000000000. 00 of assets there providing longs and shorts on both sides of the trade now that in its of a self is fine banks actually do this all the time but the bad news is what are these underlying assets even if its only an estimate 100000000000. 00 worth of assets under this thats enough to drive clean its market cap currently at 7. 00 its only 15000000000. 00 then there will be an absolute need of a bailout in 2007 Merrill Lynch owned a 7200000000. 00 of safe c. E. O. s but by the time the losses started mounting up they skyrocket to 32000000000. 00 so basically just a few 1000000000. 00 the risky assets can lead to a huge domino effect so now what are these assets and what is daveys exposure to them another big red flag is that in 20 reported a net income of only 267000000. 00 euros now davie now is the largest bank in germany and one of the largest in europe so with a scale of that size this figure is really low and really concerning added to the fact that it is currently operating in an economy where basically the entire central bank has kept Interest Rates near 0 or even negative basically pumping capital and buying up toxic assets has had a crutch and it still cant come up to profitability that is seriously concerning and it also points to the fact that there is something inside that we dont know about that is draining the company who knows it could be the derivatives exposure and basically its only a matter of time before they are going to need the support from the e. C. B. And with more details on this big financial fail were glad to welcome back Public Citizens financial balls you advocate welcome back to the show thanks for having me. And great conflicts there and theres obviously been a long. Any i guess the question now is theyve clearly sort of applied the turning kit arguably cut off a limb but is this enough to stop the financial bleeding is there more pain in the future its unclear i think theres more pain in the future i think there are a number of things they need to do they need to raise capital that is the assets minus liabilities is what theyve got in capital and theyll continue to bleed that among other things by paying a dividend so terminate the dividend sell divisions this bank as all the mega banks are too big to manage start obeying the law that would be nice they paid 17000000000. 00 in in penalties over the last dozen years and finally change the Compensation Structure the people that made the mistakes leading to where they are now were actually did that because they were paid too so the Compensation Structure needs to be changed take the top 500. 00 officers half their pay should be sequestered used to pay penalties paid in convertible debt such that if the bank does go insolvent changes of the stock which would be basically worthless that would instead of eyes these managers to put the integrity of the bank ahead of whatever gambles that their particular division is engaged with sun now how this actually come to happen after the last financial crisis we actually placed certain risk parameters that were set in place for Something Like this to actually never happen again so how do we once again find ourselves staring at the brink of a potential collapse of 150 year old Banking Institution basically at the epicenter of the e. U. But we certainly wanted to put risk parameters and guardrails but in fact we only took the most tepid steps the 2010. Wall street reform and Consumer Protection act was really the compromise that wall street let us have so for example at the socalled healthy j. P. Morgan its capital is only about 8 or 9 percent that is to say assets minus liabilities whats left is that 8 or 9 percent its 92 percent. Leveraged whereas. Its its down there at about 4 percent meaning 96 percent of its of its assets are paid with borrowed funds and what are those assets as you pointed out before they claim a certain book value but maybe not as with bear stearns when they had to mark to market they found themselves essentially insolvent finally. Back in the other big banks have grown very fond of gambling 90 percent of the gambling takes place within the banks themselves so its not necessarily wall street versus main street 90 percent of his wall street versus wall street derivatives are all bets somebody when somebody loses guess who the loser has been Deutsche Bank and i mean there isnt really a nasty word i mean we tran like it by direct was actually a really common instrument and banks as you mention use it all the time the danger is when they present a Systemic Risk to the massive counter parties who are the counter parties to to do it and do they have to they have exposure to the Systemic Risk if they collapse the one of the biggest problems with Financial Stability is that we dont actually know they may know but the public doesnt necessarily know so the i. M. F. And others have tried to chart the interconnectedness of Deutsche Bank in the other banks but in fact these are the biggest risks and if bank fails to make good on its derivatives bets thats the vector through which systemic tremors take place when the biggest writer of credit default swaps failed it essentially hundreds of billions of dollars that it couldnt pay the bailout g. Was really a bailout to their counterparts Goldman Sachs and for example Deutsche Bank got 11000000000. 00 of the United States taxpayer money to make good on the c. D. S. Is that could not make good on sun i compare this situation all to bear. And there actually really pretty similar bear stearns a collapse in confidence that drove it to the very brink of insolvency i just like right now the shorts are absolutely piling on and funds are stampeding out withdrawing the assets rand tech their biggest clients have actually withdrawn so now tell us more about the impact of the losses of these clients that theyre facing and i mean the shorts are increasing every single day could they actually drive back to insolvency before they even have a chance to recover its a vicious cycle so more successful banks the winners of these swaps their cost of capital is less the losers their cost of capital is more and so as they are depending on short term money that really its overnight and week to week funding as that funding go grows more expensive even their winnings arent enough to pay for the borrowed money that they used to try to make these scandals so yes the similarities with their sterns are are are justified. Confidence unfortunately is necessary because when youre at such a thin margin and what the public believes determines your fate. Waialae naylor financial policy advocate a Public Citizen thank you so much thank you. Its time now for a quick break but hang here because when we return in the wake of constant. Threats exporters exports from mexico to the United States spiked lauren fix the car coach joins us to break down the boom of cars coming across the border and as we go to break here are the numbers of the close. Please. List stylists lists. Leaked. And a very warm welcome to you watching us in such. This is a pretty you know the moon but its there was one of. The but for the with a little bit north of there. The whiting good sort of producing it already seems to have you know made it into the trees. That. I. Welcome back on tuesday pakistan will receive 1000000000. 00 instalments from the International Monetary fund under the recently concluded 6000000000. 00 bailout package the bailout was aimed at stabilizing the nations economy and institutions and will require very ambitious fiscal measures for the bailout to succeed a central part of the program will involve cleaning up accumulated debts in the power and gas sectors and loss making state enterprises which include Pakistan International airlines Pakistan Steel Mills and Pakistan Railways these losses have now amounted to the equivalent of 4 percent of g. D. P. Posing a serious fiscal risk theres 3 or bail package will be pakistans 13th bailout package since the late 1980 s. The nation is struggling with slow growth and a budget deficit which has climbed to more than 7 percent of g. D. P. The currency revert serves stand at less than 8000000000. 00 or enough to cover nearly 2 months of imports clearly these bella packages are not sufficient and the nation will have the soon tough policies and forms to turn the ship around. I. B. M. Announced tuesday has closed 34000000000. 00 deal to park just opened. Source Software Company red hat and marking the largest acquisition in the 108 year history of the company they remain between i. B. M. And redhat was made in october of 2018 but had to await Regulatory Approval in the European Union and the United States the deal was made for 190. 00 per share in cash a 63 percent premium on top of the stock price on the news i. B. M. Stock was down just under one percent on the day while red hat Management Team will stay in place with red hat c. E. O. Jim whitehurst joining the i. B. M. Senior Management Team under steve Ginni Rometty i. B. M. Hopes to use the acquisition to make inroads in the highly lucrative College Space opting to put together multiple platforms rather than trying to head to head with sector leaders like Amazon Microsoft and google. A record setting 2600000 vehicles into the u. S. From mexico in 20 teen amounting to 15 percent market share the latest figures show mexico come sharing an even greater share of the u. S. Auto market in 1st half of 2019 from january to june of this year mexico countered 16. 3 percent of the u. S. Auto market that works out to 1370000. 00 vehicles coming up across the border according to the major mexican auto trade group for more on this and all of those we are joined by the car coach lauren fix welcome back lauren thank you for having me now lauren this surge of mexican auto exports to the u. S. In the 1st half of this year happened of course despite the very high profile Terror Threat from the white house against mexico over immigration issues how do these 2 sides of the picture fit together it is apparent conflict with this booming trade relationship in cars. Well out of Motive Industries have always had a plan so they know many vehicles are going to produce especially if theyre launching a new vehicle and if theyre producing it in mexico they have to get it to market so they didnt let the tariffs impact them and the fact that theyve put the tariffs aside for now and it seems to be that were putting together a u. S. M. C. A theyre planning to continue bringing vehicles across now if they said today there was a tariff they couldnt stop production they might slow production but they couldnt stop and so these vehicles were already in the pipeline they were already being produced and all the Raw Materials were already there in order to produce those products so they disfigure will discontinue sending as much as we can while we can until there tariff attention comes into play so just get the inventory out the door sounds like not move actually you know what seems remarkable though is the lack of concern from corporate leadership about the reliability of their production change certainly the if there was a big story politically but on the corporate level they dont seem worried about it b. M. W. Board member told c m b c our Production Network is flexible but at this point i dont see any reason to change our plans is that kind of confidence justified or prudent in the long term. Well you have to remember b. M. W. Had planned this for a long time some brand new factory audi has a brand new factory and they want to get obviously the most for their money so they had already planned to make x amount of vehicles and theyre going to get them out as quick as they can like you said get that inventory out of your ship into the u. S. As quick as we can because of those tariffs come into play or different laws come into play that could affect the bottom line so they want to make as much product as possible so many factors are paying attention to this even though it may seem as if theyre not so now speaking and b. M. W. That company says that they will have 25 electric and hybrid vehicle models for sale and want by 2023 moving that Production Target up by 2 years from previously announced plans this news came out of the next jan 21000 auto show in munich now we know that you are noted skeptic on electrics and hybrids why is your take on the business sense of this move by b. M. W. Well b. M. W. Had to do something Harold Kruger who is their current c. E. O. Is stepping down 2 months before his one year period hes not going to renew his contract and the reason for that is he didnt move quick enough in order to transfer existing b. M. W. s to electric vehicles they feel theyve lost some of the market share maybe in europe but here in the u. S. Are still extremely slow growth and if you look at the numbers not the percentages you see theres of only a few 100 jedward pieces or a few 100. Being sold the b. M. W. I 3 just arent selling that well here in the u. S. And on a global basis they want to have a piece of that pie so they are moving it forward and again theres going to be a new c. E. O. So that will be some big changes to now sticking with electrics eveys and hybrids will need a new generation of batteries and bloomberg is reporting that the European Union is embarking on what sounds like a bit of an industrial policy summary to effective methods that weve seen used in china to promote the development of state of the art batteries the european commissions Vice President is reportedly the made the point man on coordinating more than 100000000000 euros that the e. U. Officials are working to direct into r. And d. And manufacturing president macaron is quoted that he cannot be happy with the situation where 100 percent of the batteries of my electric vehicles are produced in asia is this level of commitment enough to change the game and move markets well it could actually be a game changer it depends how things actually unfold right now every single battery is beholden to china they own all the mines whether its neodymium cobalt lithium mercury and because they own all of those mines they get to control the industry and who gets what so theyre looking in the thinking what can we do can we create a solid state battery which is a different type of battery not using Rare Earth Minerals that come from mines that are owned by china if theyre able to create Something Different not using those minerals or maybe a smaller portion of those minerals you could have a game changer which would lower the cost of batteries but as of today there is no other. Option and because china is basically holding all the strings its making it more expensive for other manufacturers to produce batteries and of course we still have a problem with the recycle side of that and hopefully if they come up with a replacement that they will be a recyclable portion of that as well thats a very insightful answer there lauren and just quickly turning back to those 1st have sales figures for this year that we mention just quickly is there any big story that you think. Is appreciated in those 1st half sales figures you know right now it looks like sales are down about 2. 4 percent which is about bringing it to 16. 00 average here in the u. S. The vehicles being sold but car sales small car sales are the only thing thats doing ok car sales overall are down 11 percent but luxury is up 1. 5 percent and thats huge that means the brands like audi b. M. W. Mercedes are doing well vogels up 60 percent thats a huge story their product is selling really well and the koreans are doing really well with the g 70 the telluride in the cone out those are their big sellers and theyre selling them as fast as they can get them so that tells you that long warranties and Luxury Brands are doing really well excellent insight as always from lauren fix the car coach thanks for your time. Thank you. And finally the European Unions Competition Commission has fined sun rio the Company Behind the hello kitty brand 6200000 euros for blocking retailers from selling merchandise featuring their characters across borders within the with the case that hughes top antitrust regulator is attempting to keep the block of 28 countries as a Single MarketCompetition Commission our margaret investigators said of the fine consumers whether theyre buying a hello kitty mug or a chuckle cat toy can now take full advantage of one of the main benefits of the Single Market the ability to shop around europe for the best deals some real avoided a larger find by cooperating with the case which was also brought up against nike and universal studio earlier this year now he was fined 12500000 euros while there has been no current decision against the case in university well you know weve heard about regulators going against powerful corporations but i removed margaret investigator is ready to go against. This character is not just hello kitty carol karoubi other obviously very popular character i know i dont think people know how big the sound is actually how popular the brand is its so powerful they control so much franchising power so i think its a good time to bring up this topic. Thats it by this time you can catch boom bust on directv channel 321 dish network or streaming 247 on t. V. The free t. V. Ad. War is always have us up at you tube dot com slash boom bust our to see you next time. With manufactured sense of. Well. When the really close is a project. The fight. It. Certainly the one percent. Whole middle of the room 6. 1000000 real in the room. During the Great Depression which im old enough to remember there was most of my family were unemployed working. There wasnt it was bed you know much worse objective listen today but there was an expectation of the things were going to get better. There was a real sense of hopefulness there isnt today todays america was shaped by the 10 principles of concentration of wealth and power. Reduced democracy attack solidarity engineer elections manufacture consent and other principles according to no on. One set of rules for the rich opposite. Thats what happens when you put her into the hands of a narrow sector of will which will is dedicated to increasing power for itself just as youd expect one of the most influential intellectuals of our time speaks about the modern civilization of america. And you try and be professional you try and leave it outside the door you try and put the comma compartments in the eyes its in your brain and so you can forget about it but little by little these. These little respects come and for me it was actually putting some ice into my wifes glass of gin and tonic the saw it and the sound i screamed to the glass reminded me of how we kept the bodies cool in bali which was with bags of supermarkets ice. This hours headlines stories the British Ambassador to the u. S. Resigns over a leaked cable scandal for his private emails expose the far from glowing reviews of his administration