smartest tomorrow and the future cannot party somerville new jersey and that does it for now for more on the stories we cover go to our t.v. dot com slash usa follow me on twitter at lauren lyster and keep watching right here on r.t. for more news. this is a table from the u.s. embassy in colombo to talk about here it apparent june seventh incident of extrajudicial executions the military according to the press that on that day they killed nine guerrillas and from desiccation right in sixty on could have you know and their vocal strongly suggest however that the nine were executed by the army and then dressed in military fatigues. displayed how you know this kind of phenomenon where bodies are dressed up as guerrillas and presented as killed in action and this and this idea that you need

to produce bodies actually encourage paramilitary collaboration this is a cia document central intelligence agency they knew about these activities they knew they were happening they knew about links to paramilitary groups and yet. usaid continued to flow. a charmer in here broadcasting live from washington d.c. coming up today on the big picture. wealthy british style.

market why not. campbell. i don't want. the happening to the global economy with max concert for a no holds barred look at the global financial headlines tune in to kaiser report on r t. more news today violence is once again flared up the film these are the images. from the streets of canada. trying to corporations or they.

can. start. to. flow in welcome across dark i'm peter lavelle on the brink of bankruptcy time is running out for the american budget deficit the failure to raise the debt ceiling could have catastrophic consequences not only for the u.s. but for the entire world how can piling on more debt begin to solve america's fiscal woes live. you can start to. discuss america's out of control debt situation i'm joined by martin henican hong kong he's an associate director at the tike group in cambridge we have jeffrey frankel he's a professor of capital formation and growth at the harvard kennedy school and in new york across to joe weisenthal he is a deputy editor at the business insider all right gentlemen this is crosstalk that means you can jump in anytime you want but first let's have

a quick look at america's debt mess. going broke i go in for bro warning stuff get asked unless a fourteen point three trillion dollar debt ceiling is lifted by need me on the line the course of the us is on i thought oh gosh it so how do you live probably more than fourteen point two trillion dollars and rising by four wheeler dollars thirty. iou the next generation forty three cinch every dollar we spend this year we borrowed against the future of our troops. boarded a us government shutdown with agreement on the largest single spending cut in u.s. history but thirty eight billion dollars more change against the size of the debt and last month the world's largest bond trader said it was all out of u.s. treasuries smile and trillion dollar deficits as far as i'm no skansen if some cons

are those largest economy has to go for growth and even that isn't possible can it handle that but to criticism of the learns on strategy and spiraling prices for anything priced in the greenback on the line having confidence in the u.s. dollar and the global economy that is it that it should last for across the arts. ok mark let me go to you first i'd like to read something to you benighted states of america if we didn't have the dollar is the reserve currency of the world we'd be greece i mean we're broke bankrupt really bankrupt and now with treasury secretary james baker how do you reflect upon those words. big loss for us was saying that the u.s. is actually out creaking of a greek speedo's if you add all the i'm funded liabilities to the national debt

figure i mean the national debt figure. isn't really what this is really about but really the unfunded liabilities are the so-called fiscal government that's two hundred and two trillion us dollars saw in many ways that then greece the budget deficit was more or less the same as crazy of ten point eight percent budget deficit in the eurozone was formed not that the eurozone is any better i mean they're just blowing up right now it will. have to be seen again pressure on greed and pigs government bonds and even germany and france increasingly looking shaky on the government as well but just as a reference on the eurozone was front there was a limit of three percent of budget deficit as a percentage of g.d.p. that is normally considered the maximum sustainable so the u.s. is now at ten point eight percent clearly as we have been warning they are beyond the point of no return and we don't really see that they could solve the problem in any other way then and it's now. estimated by most analysts that greek greece will

have to do it basically and some form of default or debt restructuring or very very high inflation in respect of currency to bed really out of this step so we say stay out of the u.s. dollar stay out of any form of medium to long term u.s. treasuries but by the way also eurozone doesn't look better again so the rest we are very optimistic on it ok jeffrey in cambridge i'm going to you is that too bleak of a picture there i mean cut the past the point of no return i should morning sir. well absolutely not and i'm not sure i heard that right there is there's no chance we're going to have a restructuring of the debt i mean we have a very serious long term debt problem we've had it for quite a while it's on its long term in two ways one that the problem is the deficits the moment the problem is the retirements and the rapidly increase in. health spending medicare and social security that are going to come over the next few decades that's the problem it's also long term in the sense that we we've been

facing this problem for thirty years many people like myself have been worried about this for thirty years there's nothing magic about and about this year the only thing that's magic about this year is it's become a political issue this year the american political system kind of bizarre early swings back and forth between not being concerned at all about the problem and making it much worse with huge tax cuts like we did in the early eighty's when james baker was working for ronald reagan or as we did in the bush administration versus times when all of a sudden we're concerned about it i'm happy that i mean if we're concerned about it fine let's take advantage of that political crisis to solve the problem but if you look at. it on the willingness of foreigners to hold u.s. treasury securities there isn't the slightest sign that they know that they're getting tired of it so to use a phrase. that crisis is to my mind absurd five years ago i don't feel bad about it i really do as they have been crying a lot of debt yet because nobody has buying it. ok i was just telling us to look at

so i thought a lot of other china is buying it we know i mean it isn't just the u.s. federal reserve lots of other central banks like china are buying now you might say at some point they're going to stop and i'm worried about that too but at the moment they're not slowing down their purchases foreign central banks ok joe where you where do you gentlemen and where do you jump in all this. generally the view that the crisis is totally overhyped i mean this idea is like will if we didn't have the dollar we would be greece but we do of the dollar and. we have a fundamentally different monetary system. greece doesn't control its own currency they're suddenly borrowing and someone else currency they have to build up a surplus and then pay it back we will fundamentally different system than that and it compares to a greaser ireland or any other trying to compare it's just wrong and i think look this is something that politicians freak out about and you know as the other guest said all of the sudden it's become a political issue but if you actually i look at the market i look at what how the

market is reacting to america is that everything is knowing that all the math is known and everyone's free out about how we're bankrupt but the market doesn't seem to care and is not concerned so i really tend to think the issue is mainly a lot of ok i want to go back to martin i mean it's a mark of the the market didn't isn't particularly concerned by it but it seems to me when everything is goes sour the markets are the ones that are saved the bankers are the ones that are saving if there is a crisis they're going to come out on top like they did in the last crisis here i mean our politicians are. underestimating this problem because it's just so gigantic i mean i have a calculator on my computer and i can get fourteen trillion dollars on a number of digits by it's a big number it's a really big number and believing that it's going to be cut down when the budgets continue i mean the defense budget continues to expand i mean if we reach the point where you know where there's going to be a clash of this system and you can't keep borrowing forever everybody knows that.

but obviously most of them put it in stone and really seem to understand the situation as ed or maybe they do and therefore for other reasons outrage to raise their voices or if they do they're marginalized in some way or another all go on now and more recently you see those raising the issue of scaring a bit more attention finally because there's this has now become this political issue but obviously that was still ongoing before but i would like to comment to jeffrey scholars on the market the market isn't seeing the danger because that's a very important one but if you're talking about the markets those two things to look at there one the stock market there but one market and the commodity market so actually is three and that way but mainly if you're looking at stocks market because i would put it into the basket of real assets because stocks represent firms companies there's real asset behind them or services for beach they can increase the prices and i understand commodities are also represent tangible assets or if these markets and worried her gold and silver they're going up

a lot what do you what do you see roid i mean i think the moral of war it's a market gets about this over and that crisis and the resulting inflation hyperinflation because that's the only way they could possibly get rid of their debt the more worried the market gets the higher you see commodity prices rise gold and silver rise as a hedge against this possible bankruptcy or very high inflation and as a result of bankruptcy there is an indirect bankruptcy and also the stock market could actually rise on inflation expectations so really what you want to watch there is that one market and you're right to some extent we haven't really seen a celebrate yet but that's why for investors now as bill gross the story it's absolutely now the time to get out on any longer. and even if anything one should call short of a reward even shorter because you're still in the dollar and the dollar may just suffer through the devaluation so no i don't really see that the market isn't getting adjusted to one model but that's going to come gradually you want to drive in there driven so are you want to do the bill gross or the. do you know what i

mean joe for shit i'm going to get selling bonds is what mitt has drastically misunderstood everyone saying oh he's selling bonds because he thinks the government is going bankrupt or what not that's actually not what's going on he's selling bonds because he anticipates the end of q e two essentially rate hikes the fed goes back to normal zero interest rates and so the negative interest rates that's essentially a rate hike and historically that would be a good reason to sell because if you actually look at what his partner mohamed el larry and it's saying elsewhere is like of the ten year yield got a bit higher we pry actually buy bonds again so this is another thing people look at his move it start to freak out and say oh this means that if the government is going bankrupt it's actually really nice and easy to price and also how do you think is this rising. so how do you possibly think you even say right interest rates are going to be on the rise how do you possibly saying this these debt numbers are high interest rates are going to be unbearable by the united states

government so that's one issue but i want to jump in here. just yeah i think. so i seem to be between the other two panelists in a sense number one we definitely have a long term fiscal situation which we need to address and at some point if we don't there could be a crisis certainly there's the risk that eventual it could be ten years from now there could be a sharp increase in inflation and interest rates and fall in the bond market we want to avoid that we can do it it's not it's not impossible if we have a balanced kind of a program to address it and for my money president obama recently is recent speech addressing it just broadly speaking was a kind of balance we need to do a little bit of slowing the rate of growth of entitlements we need to cut the metal spending we need to cut military spending we need to do something we need to do a little bit and maybe we'll succeed in doing that we certainly can if i sat down with the economists you know

a group of economists are both parties we could we could start a pretty quickly but i'd be doing very very and i don't even i mean is the really good we should break here and after natural break we'll continue our discussion on all that debt stay with arkie. place lists. bringing you the latest in science and technology from around the world. we've got the huge earth covered. plate. live live live live.

live . live. and you can still. listen to. live. welcome here rostock i'm carol about three minute we're discussing if the u.s. will default live keep the lists live. ok jeff i want to go back to you because he said something really interesting if you could could get members of both parties together you can solve this here is not really a revenue problem and not

a spending problem how to generate revenue. it's but i said if we get economists together of these. i'm not. going. you know i mean the good the good even though it's there's at the moment somewhat surprisingly i would say the markets are completely relaxed there's no sign that they're nervous about holding us back and as long as they go on doing that we don't have a crisis but we be foolish to rely on that forever that's that's all that. that's one point it's kind of nonsense a call that at this moment in history two thousand and eleven is when american politicians are suddenly viewing us as a crisis it would and much much easier much much better to have just half of the support for fiscal stabilization ten years ago or five years ago but we are where we are the good news is maybe we can take advantage of this all this political ferment to address the problem the bad news is that one of the two political

parties is speaking on sense from an arithmetic viewpoint the republicans think that they can solve the budget deficit by tax cuts and i mean it's just a complete nonsense and we've shown this over and over again reagan thought the same thing and the budget deficit got much worse he could triple the national debt george w. bush thought the same thing and the budget got much worse he doubled added created more debt than all two hundred thirty previous presidents and his father and reagan combined so now the republicans are saying exactly the same thing we're going to we're worried about the budget deficit so we're going to cut taxes it makes no sense ok joe what about that because you know there's a if you take the united states there's a lot of. wealth in the sense of financial speculation in things like theirs and theirs the concentration of wealth here i mean i know it's politically incorrect to talk about taxing people in a bad time but there are some people that have a lot more than others ok and if so if the country is so concerned about dead then

you know then generate a little bit more revenue over a ten year period or something like that i mean the rich are going to stay rich. yes i totally agree that this idea that we face. catastrophe and we're going to become the next greece and have all this and yet this is so severe and it could threaten our prosperity for generations but we can't raise taxes slightly on anyone is an absurd level of sort of split thinking it seems completely contradictory i think what this basically exposes that is that most of the debate is actually just a pretense for getting it it's the whole thing is a pretty says we're getting something else so it's a pretense the republicans want to use the debate as a opportunity to weaken some of the social safety nets and cut taxes the democrats will also you know. the republicans that the debt is an issue and they want to use it as an opportunity to raise taxes and cut defense spending so this big problem

that everyone agrees that it's a huge problem and it is really just an opportunity to push whatever visionary he had on everything it sounds like to me that everybody wants to go to heaven but nobody wants to die martin if i can go to you i mean if this really is a political football and i would agree with our that you guessed it is a political football here because somebody wants something for something ok but isn't this really like the the the people on the. arguing over the seating order on the top deck because it's still worse and worse. absolutely there even this debate here i mean we're destroying geoffrey i think they're totally getting carried away in these idle ideological debates and arguing this words by the totally ignoring what actually the numbers tell us and because we are talking about the rating because there be a rating downgrade on the united states on the way to being potentially bankruptcy

and also just want to say not all of the rating agencies are stopping this type of thinking and giving the u.s. a aaa but actually the chinese rating agency. has downgraded in november last year's united states plus it is a negative outlook and i just want to give you a call because he also does gave me one from the chairman of the dugong global rating agency and he is saying that western rating agencies are politicized and highly highly ideological and they do not take it here to objective standards the u.s. is insolvent and faces of anglesey as a pure destination by the rating agencies still give a high rating ranking so again you know this debate about being a go if you're billion dollars cut in there is totally irrelevant i think if anything i mean one one hole but i do see where the united states even in the in the near future now it may be our great kiters agricultural sector in trade with china their projections are now their trade with china is going to grow into a double over the next five years and you look at what this has done to brazil saw

their lightnings but certainly not their budget deficit again i don't see a way out of this short of a restructuring everything else is just you know they deviated from people who don't understand where you go to nominate jeff if i can go to you. structuring is granted there are so many ways we could restructuring the restructuring is nonsense we want to avoid a situation where ten or twenty or thirty years from now with we have a huge year or the revenue is growing and we're borrowing from abroad to finance medicare and we want to avoid a situation where we might be forced into a buffer. twenty years from now the idea that there is any chance of a restructuring you know within the next few years i'm sorry is just nonsense i don't understand why michael panelist is saying that yes yes that's a serious problem yes we should address that and there's all kinds of ways we could address it they're politically very costly very dangerous the politicians don't want to say them but you know it's if we had. doctor value added

tax or auction off the greenhouse gas emission permits together with steps that many of us are proposed to slow the rate of growth of spending in entitlements and to trim defense spending in addition of domestic spending to a little bit all around. it can be done if problem is a political one it's not an economic problem joe if i can go to you if you think there's a mindset go ahead and i was going to say this isn't there just a mindset in the united states is that the dollars just too big to fail which is too important in the world and we'll just put it off in a few more years like a lot of noise about lifting the ceiling and let it somebody else worry about it because as jeff pointed out you know ten years from now twenty years from now thirty years from now nobody in office today is going to be in office then. actually i kind of think the opposite there's a there is that definitely this idea that you know we are too big to fail but what i think is actually more interesting is this kind of opposite strain of thought that's having this kind of liquidation is let's not raise the debt ceiling now

let's just bite the bullet in the fall let's restructure our debt let's just pull the rug out from under the u.s. banking system and under the dollar right now that's a kind of a surprising new strain that you hear more and more of what if there is no reason to restructure actually you know people say oh the debt situation is getting worse and worse even by some metrics it's not interest payments as a percentage of tax revenue or interest payments as a percentage of g.d.p. have actually gone down because interest rates have gone down over the last twenty or so years so it is we are we have this big we have a lot of people want to take something incredibly painful want to do something drastic like not raise the debt ceiling when there actually isn't any kind of external force that suggests we need to do something like that jeff you want to jump in there. well yeah i want to i want to make clear that the only reason why words like you know default or even are even mentioned by anybody is not because

we're in a greece situation but rather because the two parties of congress are playing a game of chicken a deliberate game of chicken which i mean it's almost like holding holding the capitol building hostage it's not directly related to the issues involved were not running out of money i mean other countries raise their debt all the time and as long as that is an increase in too rapidly for example if it's coming down as a share of g.d.p. or you know it's not that high so that that's that's not an issue we happen to have this all kinds of corks in our political system and one of them is that if one of the two parties chooses to pull the pin on the hanger date and say if you don't give me my way on what i want then these other issues like you know prohibiting abortion and stopping abortion sadistical obvious and irrelevant things i'm going to blow us all up i don't hear anyone anyone a single person in the united states saying we ought to restructure our debt rather it's it's going to blow us all up if you don't give me my way you know marty it seems to me that if the u.s. isn't financially bankrupt it's intellectually bankrupt according to and i'm kind

of extrapolating from what jeff had to say but again you know i mean the thing is is that people are using this as a political opportunity there may be a crisis that may not be a crisis but i'm going to get what i want a portion was mentioned i read that earlier before i'm going to do this program here but there's a lot of other things that people just want to you know a lot of horse trading and again is we're going the titanic is going to its final destination people are now waking up to what really needs to be done just mention some very good things. yeah i mean definitely. the baiting going on maybe you know even soon you will have to give aid on raising the debt ceiling or not raising the debt ceiling but while this is being debated i think they are thaw it he who can really decide on whether or not they're going to raise the debt ceiling of the u.s. is the going market and of course the major under investor saw i think that's really the thing to watch we have been watching the eurozone one market re years in the beginning also rising very slowly and then suddenly spiking and if it hadn't been for the bailouts of now it's really yours on countries they would already be

history and this can go very very fast or for wonder investors in particular this is something to watch very very carefully in our u.s. years going up and we're just last week actually out of the u.k. you know an advisor to the central bank saying that's it within one year a u.k. interest rate might quadruple so if this is something that's going to happen around the world as a result of the rising inflation which you see reflected in commodity prices gold you know silver has been surging like there is no return or and this is the fear authorizing force. rising potential bankruptcies and also as inflation and if that continues again as inflation rises interest rates would have to rise because one investors demand it and this is something to watch very carefully whether or not you believe the u.s. will go bankrupt or not go watch the rates there were probably tell you earlier so what's going to happen all right jeffrey i'm going to give you the last word we're going to be having this conversation a year from now. yeah yeah well i mean the food we should be

afraid that met some private investors get tired of their current eagerness to hold u.s. bonds and there will be a decline in u.s. bond market an increase in interest rates that is not a good fault or restructuring i do not understand why that word those words have been used at all on this show all right gentlemen we've run out of time here many thanks to my guest today in hong kong cambridge and in new york and thanks to our viewers for watching us here on r.g.p. see you next time and remember cross talk. a little. little little. little

little. little little. free. education free. free. free free. free. free. free blank videos for your mediocre c.e.o. don carty tom tom. he exists.