good evening welcome to the capital account i'm lauren lyster here in washington d.c. today europe tries to save itself european leaders are meeting a bit expectations here and rumors with the international monetary fund reportedly considering getting more involved well u.s. taxpayers wind up funding a euro bailout and with reports the head of the f.s.f. was en route to china today is that a sign of the direction of things meanwhile in the u.s. the obama administration and bailed out a new plan it's hoping will help ease the massive burden of student debt student loan debt but as the president warning today listen you could moment problems with those to the didn't happen overnight there will be solved overnight. and interestingly new figures from the college board show the cost of college surged again this year more than eight percent showing the white house may have

a hard time making a dent in that debt meanwhile the president's approval rating among those young folks who helped elect him i have now dropped below fifty percent so hoping for reelection what is the president's student loan plan really about meanwhile back in one thousand forty nine on this day u.s. president truman raised the minimum wage and today news that big gains in that department are going to the top one percent income for those earners shot up two hundred seventy five percent from nine hundred seventy nine to two thousand and seven everyone else saw income grow much less from eighteen to sixty five percent those numbers from the congressional budget office this as occupy wall street protests continue to bring the issue of inequality to the streets of the u.s. all right let's get to the capital account.

all right as i just said today europe is trying to save itself with the overhang of course of a sovereign debt crisis which could cause a banking crisis with contagion that could reach around the world to countries including of course the u.s. where i sit now european union leaders have been meeting today in brussels to try to figure out a solution the costs have already been high we've seen the effects of austerity across europe most evident in greece where we seen protests and strikes as a result which you see right there they've been violent so what are we going to see today are we going to see a grand bargain as mine even possible at this point and what lessons are there for the euro for europe and the u.s. joining me now from athens is yanis varoufakis he is professor of economics at the

university of athens and also the author of this book the global going to tar america the true origen's of the financial crisis and the future of the world economy i should also mention he'll be in the u.s. on a speaking tour event or third through tenth i think you can catch him in texas or new york if you're there welcome to the show professor we're happy to have you thank you so much for having me all right so with the eurozone crisis we've seen months of talk about solutions about haircuts increasing the size of the bailout fund leveraging the best creating entirely new institutions like some kind of european treasury and of course culminating in today so my question to you are we going to see any grand bargain do you think out of today's meeting that addresses the enormity of this problem i should be good you surprised if anything sensible emerges from these i think it's the most comes. after the

commencement of the crisis. you was in denial come think of it you look all that a few weeks ago the guy came to europe in order to lecture the european union has by dragging on the importance of do something about our company sector and they something in a way on the basis that what i have does the united states a have to preach and the europeans are the good guys as well because the us that is worse than the european that what you can find today is and i think. the beginning of a program the europeans now are seeking the assistance of the i.m.f. and indeed of china perhaps in order to help with the crisis in europe on the one hand they were right to say that the amount of debt in europe is actually lower than it is in japan and the united states and other places and you know the same time there is in this is the i.m.f. and china is something that is who is seriously wrong with the approach that europe

is looking so what do you think we're there methinks here that you think clearly. two things first leg of the systemic crisis that keep. operating lanka inexperienced the firefighters first they came to office trying to extinguish the fire here by the time you go down to business the fire has spread to the government then there are some doubling spread of portugal going to ask of course will spread legally and meanwhile the banking sector that was collapsing so this is what you get when you have a systemic crisis and you want tried even if it systematically has and instead you eat you get sidetracked in the cards for the whole of the learned dealing with the whole systemically this is the main problem but underneath that if i'm allowed to say. something deeper and the insistence of the of one mainly the surplus countries that germany holland song that you could have

a common currency area. we don't anything but will. you continue. to puzzle over the years ok so the bigger crisis is common currency but without kind of the fiscal unity of one common country or government but going back to your first problem that you name with with policy leaders being firefighters trying to extinguish all these different flames as we can see quite literally there have still been flames on the streets of greece recently do you think that's what we see out of what you said is the fourteenth or fifteenth of these summits just another piecemeal solution that maybe stems the crisis per couple more months or so. absolutely there are two things that need to be done here one is to unify the banking sector imagine if in your country in two thousand and eight the state of new york. wall street and the state of nevada hope to some of the las vegas banks

both states of the. imagine if in the midst of all that californians new yorkers were asked to bail out of ohio and goes on. powers that be wouldn't denial of the fact that there has to be an attempt to pull together good sources of the nation. to bulldoze the birthright of the banking crisis i think. in the process of disintegration where this was happening and to your point i mean california and from there i can tell you they california would be about a bailout anybody at brocklebank would get through all the other issues here to conform to economy of country and in surplus and as with many other states in the house right now i totally see your point i guess the question then with you saying that probably this will be a piecemeal solution how long can this go on in europe because you use the example of athens where we absolutely see the cost of austerity can greece withstand

another round of it with protests on the streets with strikes and that it would be needed for the next tranche of the bailout. unfortunately there is still a long way to go in the process of the immiseration of greece and of many other parts of the european union and european union and remains at each place in comparison to other parts and for global even greece you can find the total collapse we're going through has a long way before all of you fall if it is allowed to fall but the problem is not so much what the greek social economy will stand the question is whether goon and mike you can on the power like the unions own will allow itself to implode and for the third time in a century bring down the global economy with it and as interesting as your last book the one that we talked about at the beginning of the show was how america caused the financial crisis do you see europe causing the next one and out here.

well. the united states are not actually arguing in my book clearly it's the united states of cause the crow so this. is the point i'm making which i think is quite well known is that in the postwar era the united states has . a. sense of good things bill's going to include since the beginning of the first post war period a bit of the woods here. and also in terms of a very live kind of development model for the 1980's. a kind of controlled disintegration of the world economy from which you love. merge that at the same buy . goods to growth both in the united states and outside the united states while at the same time. sowing the seeds of two thousand might but yes you're right at the

moment the global economy should be extremely scared of what's happening in europe europe. is a new sort of thirty percent of the global global g.d.p. we're continuing recession he says you can't believe the leaders until you go up once in a session i've got other time in the united states to do things double dip and china struggle not slowdown all right so you're saying that a pretty bold statement that it's actually european leaders are engineering a recession at a time when as you mentioned the u.s. is teetering on one this could really get uglier here that it even has then i want to continue this conversation we're just going to go to break for a couple of them as if i could ask you to hold tight because i do want to get to what a u.s. role could be at all of this i also want to ask you a couple more questions because you are sitting in greece you have eyes and ears there that we do not so we will be right back with you on a fairfax author and professor of economics at the university of athens.

all right here's a little fun break for you time now for the word of the day where i break down a financial term or concept for our very smart viewer but perhaps maybe not the financial expert so unfortunately starosta typical deliver words of the day is taken the day off but good thing for you i know what it is it is a haircut and you should know what this is because as we speak with europe trying to avoid a massive crisis which my guest and i were just speaking about and a greek default being part of that haircuts are in the headlines here is one from reuters earlier banks inch toward a fifty percent greek haircut deal and since then reports are that it's even going

to be higher so investors have been fighting this they don't want this so what does this mean exactly well let's look at the definition of a haircut it is the percentage by which an assets market value is reduced for the purpose of calculating capital requirement marching and collateral levels so let's see how this factors into greece's debt crisis and the solutions european leaders are trying to find to it because i think if i give you a picture you'll understand what this means so greek debt held by bondholders the outstanding debt imagine this is it so here's what it looks like if it gets written down by twenty one percent which was the original amount of haircuts that in investors agreed to so that just gets liquidated now as part of this bailout deal they're talking about more haircuts fifty to sixty percent what does that look like . ok it gets written down it gets liquidated so all of that money is being lost and now we're hearing that negotiators are pushing for seventy five

percent haircuts which would mean that even more gets liquidated even more money gets lost by those bondholders so now you can see why haircuts matter why investors perhaps don't want them but why maybe they need to be pushed for we'll get more into that with my guests but that is what america is. and still ahead right here on the capital account the i and that may be taking a larger part in this euro zone bailout fund so with the u.s. being the largest contributor to the i.m.f. well u.s. taxpayers find themselves footing the bill for a eurozone bailout. just

put a picture of me when i was like nine years old so she told the truth. i may confess and i am a total get a friend that i love driving because he is a planned trip. he was kind of the jester that. i'm very proud of the role without you as playing. the. guitar sometimes you see a story and it seems so you think you understand it and then a glimpse something else hears you some other part of it and realized everything you thought you knew you don't know i'm sorry welcome to the big picture.

what drives the world the fear mongering used by politicians who makes decisions to break through it through who can you trust no one who is you with a global missionary zeal. where are we having state controlled capitals it's called satchels when nobody dares to ask we do our t. question more. welcome back to capital account we are back with you on is verify economics professor and author to talk about the lessons and all of this for europe and the u.s. especially amid reports that the i.m.f.

may get more and balled any european bailout all right thanks for sticking around so first i just want to ask you because you are in greece and because we saw pictures today of people lining up at banks to take their money out and i will pay out two tweets with people saying greek bank run so i'm just curious with you being there if you see this as exaggerated or if there is a genuine concern on your part about this. firstly. of the significance. but i think the most poignant aspect of this is that. the use is the use of unbelievably until a few months ago is now in the process of the grecian and. show you why. in the united states if you have a dollar at the dallas bank account or in a dollar in the chicago bank or a dollar you know new york you expect to present value or the goal is precisely to

say where we might be of a state in the u.s. we have the same currency but a euro look good has a lower prism in the eye is in the eyes of investors and the positives than a year ago as you know her own bank account and you are on the breaking out has a lower value expected by you re learn and you're going to pollution bank account this is a currency union in the process of falling apart in the process of falling apart yet any projections about when you think this is going to fall apart what the tipping point will be most of these things professor stuart to me never to invent at the time of the same time if i don't want to have egg on my face. look at the european union as i said before it is a rather rich region there are deep pockets here and we can keep throwing good

money after bad for why the long wild to go before the chickens come home to roost and when they do come home to roost then i think the powers that be will have to me going to snap decision on whether they want to fix the you know system conflicts or lips just collapse so this is a decision this is the hands of leaders really i would never want to throw an egg in your face as you said to put it in your words but following it through with a great figure take their money out of great banks say greek bondholders do take haircuts fifty sixty seventy five per cent as is being pushed this will impact the greek banking system so say banks start going bankrupt well then who bailed them out the broke greek government. well it's not because of the bush group who've been bankrupt for quite a while and. surely your account and if he keep doing normal business it is because the european central bank system is keeping them on

a drip feed but by only in the early going to be the big need in order to keep going but hey this is not just a problem for greece and many of the grounds of the euro zone are bankrupt and they're being kept on seeing that in feet but maybe simply the banking sector in europe is. i think they're ill in which the craze is. unfolding and this is where. you know to speak to our finance ministers and throat dr knock some sense into their heads they can listen to him then i hope that at some point they do listen to him or to reason because unless the in front of the banking system and the computer lies that they're breaking system he's going to europe just like the japanese banking system was operating in japan in the one thousand nine hundred to black holes something known as usual canonical dynamism of the whole continent than be bank there's i think

what you're referring to here is a term it's a good one now and i think is this part of a larger issue that needs to be addressed in this global financial system and the way to have architected that allows capital to build wherever it wants and create these huge bubbles that that berthing hard mouth their problems. absolutely but i don't believe that the problem is so much in the crabapple i think the problem has to do with the fact that we have had for thirty years. dynamic system to which i can get them on increases like germany japan china was made on the basis of between states which were then financed by its number of countries that was rushing from those centers from germany and japan from the arab nations from china later back wall

street can finance these to the exits on the back of a number of capital we have built a frame and civilization which put simply it's nothing more than production of mass of crowd money it was the banks which then flooded the world creating all the those bubbles so are the root of the problem is not so much what the banks do but the way in which i think you can montes be doing some really so only of other people certainly is by means of the united states there is well there was a very unbalanced. if you want however brought a gun for the us in a pile of private money catch turned into ashes as a result of the collapse of wall street and now we live in a world which is little globes simply because the police. we are the deciding mechanisms has broken down and there hasn't been another one and more rational and balanced one complacent all right ok we're out of time i so appreciate being here i

wanted to ask you about that and your friends you can fit on the show yesterday of having to go with president obama's new plan for skin care but we're out of time at any case i so appreciate all of your insight as we have these big meetings going on today and you say that europe is certainly teetering on the edge of recession where policy leaders to blame and impacts that could be felt everywhere that with the on if there are yes they can actually be on the show. thank you. all right we have dealt with some heavy stuff today economies on the verge of recession global tidal waves of debt and destruction so now let's lighten it up a little bit and bring on dimitri caffeine as our producer and shannon donahoe back

welcome back we missed her in the control room to talk about some other financial stories so i mentioned at the top of the show that we've seen i think it's two hundred seventy five percent surge among the top one percent over the last thirty or so years which has not been felt at all anywhere close by the rest of the people in this country so what are they going to do with some of this money vault here is an idea that rolls royce has come up with they came up with a prototype for an electric rolls royce that according to the report i believe is a three million dollar car inserts one point said less and less with a rolls royce. three million oh thanks for helping me out there all right so this car rave reviews from who the article that i was reading and i mean it i just. it's was beautiful i want to get more so i want to i want to go through these i

think with the amount of money we've made here in media this is. really love to some of these when you drive up and that's when i will know you were up to ferry its activities. already. all right let's not go. hand in you want to weigh in here i just i don't understand why a rolls royce needs to be electric for. why why was why would people with that much money care about green shannon i will tell you why because i used to work and hollywood i used to work in entertainment and all of the celebrities are very into being green and they were all driving prius is because that was the best option but a whole load they would obviously want to upgrade and have a more chic and expensive electric vehicle i'm sure plus the battery in this movie can power a small village in. southeast asia and evidently the batteries and and your i phone in till the end of time will power your i phone until the end of time right

until the universe finishes expanding or contracts. and it's on because most people will never ever be able to afford this and it's kind of sick but a lot of people can. speaking of billions of dollars and billionaires remember when all of that money was lost in baghdad forty billion dollars of it that was transferred from the new york fed to iraq and then disappeared no one could find it because during a very tough time well c m d c did a lot of investigating on this and they found out some interesting things first here's a little bit of a snippet. your just airborne crime scene unit. on the bridge to restore the government forces needed. ok so it turns out they had one guy that was overseeing the transfer of billions of

dollars from the federal reserve q iraq there was one guy it was transporting all of this money and overseeing it forty billion dollars then was it was basil. why is that money going because. yes the bank of international settlements is about as i use it as a big money to have the world basil loses forty billion dollars in opens up a firm in dubai that manages money transfers and war zones which i find really weird like who are this guy got lost forty billion dollars and now he's running money to buy his next big deal is in libya if the rumors i mean it's absurd that i think that this is able to continue i'm totally with you on that not going argue there shannon. i'm getting ready to change our job here i would like to help that child big giant gulf let's not you cash in on it and even though you're responsible for all this lost money you still get employment because for whatever reason that wasn't on a background check ok meanwhile speaking of war zones evidently the italian

parliament amidst all of the craziness in these budget deals has become one and they got into actual fist fights over all of the tensions in italy evidently this was over pensions dimitri anything to say on this we're almost out of time but i love you. live in italy is that we're going to. have all this is the kind of stuff i love to see well action in parliament and nobody beats politicians of the very proud doing all sorts of crazy things and you know what else you guys share in common was that you also like to fight about debt three topic why were they fighting over pensions pensions it all stems into the debt their hundred twenty sets trying to trying to twenty percent debt to throw the problem that i right we're out of time i had said that's all we have time for thanks for watching please follow me on twitter at lauren lyster coming tomorrow and until then thanks so much for watching and have a great night. for

sure is that so much but i want to throw that he was or was there's the taliban bad guy speciously to me libya's national transitional council has announced the country's liberation from the kicked off the dictatorship what kind of country. wealthy british scientists on planes. sometimes it is not such a hard. core . markets finiteness scandal find out what's

really happening to the global economy with my skies are for a no holds barred look at the global financial headlines tune into cars a report on our.