good evening welcome to capital account i'm more in the stir here in washington d.c. and braise calls for a referendum on its bailout reportedly freaking out its european partners sending stocks down and casting doubts on the country's ability to avoid default meanwhile turns out u.s. banks have been writing more insurance against a greek default and defaults of other euro zone countries in the first half of the year it's a risky business so could we be headed for another a moment and first there was a lender now beacon power another alternative energy company with backing from the obama administration goes bust meanwhile china steps in to build an oil refinery

and saudi arabia where an american company pulls out in the global resource and commodities grab who's winning and who's losing and speaking of commodities is a driver simply getting too expensive take a look at this you can see it that boeing that seven six seven flying from newark to warsaw hit the runway with out its wheels in an emergency landing belly flop airline company offers low price deals could this be the price travelers pay for scoring great prices on flights all right let's get to today's couple account.

as i said beacon power is the latest u.s. alternative energy casualty that is filed for bankruptcy after getting loans from the u.s. government it received forty three million dollars as a loan guarantee from the obama administration's clean energy program and of course there was the solar panel makers the lindros that went belly up a couple months ago now that one could cost taxpayers five hundred million dollars now cylinder one of the alone for solar panel maker is declaring bankruptcy two other u.s. companies declared bankruptcy around the same time one of the reasons they said they simply could not compete with china also the financial times today reports a deal to build a ten billion dollars oil refinery in saudi arabia is expected to be signed soon now this deal will go to china and that's after a u.s. company pulled out last year and now this is tapped in this report as a sign of more than just one deal but as

a sign that middle eastern oil rich countries are shifting away from washington now the u.s. has fought wars in this part of the world over oil but you do not have to take my word for it just listen to former u.n. ambassador john bolton iran has made little secret of its desire to gain the dramedy in the region of the persian gulf a critical oil and natural gas producing region that we fought so many wars to try and protect our economy from the adverse impact of losing that supplier but having it available only at very high prices does you catch that the u.s. has got so many wars to protect the oil and the prices that the u.s. pays for it so our big question with all of this news that comes out is who is winning and who is losing in this global resource grab in this move first the stain of the economies with energy and oil sources joining me now to talk about it is dr stephen leeb he is chief investment officer at leave capital management. and he is

author of this book among others it's red alert how china's growing prosperity the ratan the american way of life he's just the guy to talk about all of this dr lead thank you for being on the show so first because you wrote the book on it it's about america and china your book so is far is resources who's doing a better job acquiring them. well i think that it's just overwhelmingly in favor of china right now and so overwhelmingly i think that even the problems you're seeing in the developed world right now including greece including. the united states including europe you can really trace to the fact that resource prices are extremely high much higher relative to incomes lower in lower income people than they've ever been before and twenty eleven with virtually no growth in the developed world virtually every important commodity you will average higher than they've ever average before average gasoline prices in the u.s.

will be the highest ever almost assuredly in twenty eleven as an example ditto for corn for copper and the reason that this is happening is china they are consuming and acquiring and accumulating every resource they possibly can and just to give you one idea why they may be doing this i mean if you don't believe me think about this goldman sachs i think two or three or four days ago put out a report on copper which is utterly critical critical for growing for oriel critical for putting up buildings critical for you know you name it electric grids etc their words were proper in three years could be unimaginably that's their word unimaginably high think of what that will mean for the developed world and the u.s. and europe and all those other countries outside of china why not china because china right now as we speak is mining as much as they possibly can while we're

fighting a war in afghanistan i should be more they actually are spending comparable money billions of dollars mining copper they have set up a mat massive infrastructure a paramilitary and you know way i mean this is how bad it gets in a way they're actually using our war to distract the afghanis that's not intentional but between most. of course china does is not directed against us but directed for china way i see it is that there is a war going on in this world right now and it's a war for resources we're not fighting and we really don't even know it exists china is fighting it with all the coming and all the skills and all the people that they have and if we don't wake up soon enough i fear for our standard of living our way of life the whole shebang and i think these kinds of protests that you're seeing right now come from the fact that gasoline and other necessities of life

just cost the typical person massive massive percentage of their income they have no virtually no money left over to do other thing of course anyone that fills up their car with gas can definitely see that but you mentioned that this is a war over resources and the united states isn't but the united states is fighting some other words it's fighting wars in afghanistan wars in iraq where it's invested in the case of iraq you know three trillion dollars depending on who you talk to in afghanistan hundreds of billions of dollars china in those countries you mentioned the copper in afghanistan in iraq they've spent three point four billion dollars on energy two point one billion dollars on power which is a better return on investment war or these contracts for energy power and copper. well i think obviously what they're doing is going to be a much better return on investment and it's going to probably as sure them they're

doing the best they can to assure their people a decent life in this century we want to do the same thing but we just don't realize what the risks are and we have to wake up and this far as auriol goes i mean you mentioned bad china just signed a ten billion dollars deal with saudi arabia to build a refinery there i mean they are gaining control of these five all parts of the world and here is the prediction if china has enough aircraft carriers so that they can drop enough people into saudi arabia to protect their oriel fields you'll see the saudis no longer price or oil in terms of dollars repricing or oil in terms of gold and in terms of want and if that happens inflation in this country is going to go crazy i think the stakes right now are as high as they've ever been i think the risk reward right now when we look ahead the next five years or so are about the same as if we were fighting are on the verge of fighting a shooting war it's that serious i mean our whole style of life i really believe is

a at stake and i really think you're seeing evidence of it median incomes in this country fell ten percent between twenty seven and twenty eleven that's amazing and if you look at the median income of let's say the lower ninety percent of this country it probably fell fifteen percent during that period we can grow with the kind of headwinds we have right and dr levy you mentioned saudi arabia and they have a new crown prince which is believed to be more critical of the united states already in the reports i've been reading it's believed that study radio is looking a little bit more to beijing and washington when it comes to oil you're making a bold prediction what do you think that's going to happen or what would what would need to happen in order for for what you're saying to play out. for us for the saudis to start pricing oil in terms of the won the needs currency and naturally gold some combination tell you exactly what it would take it would take this sure

and says that china can protect the saudi oil fields right now they don't have the equipment the aircraft carriers they have one if they have two or three or four they would be able to drop enough troops into saudi arabia to protect their oil fields once they have happens there is absolutely no reason for the saudis to kowtow to the americans the only reason they're doing that right now is because the of the military we provide them china is catching up very very quickly could be three could be four years it could be two years match or wind but de facto right now china is probably more important to saudi arabia then the us i mean and just as a side bar china right now is actually showing saudi arabia how to desalinate their waters using solar energy and you know it's it goes on and on china has an iron clad grip now on probably the two most important renewable energies out there that they're going to solve all our problems but they control you were mentioning the

cylinder and other solar energy companies are going bankrupt in this country at evergreen which a few years ago was trading at one hundred twenty it's now trading at three cents this is all courtesy of china underbidding everybody they now control sixty percent of the solar energy industry they fact they completely control the wind in industry because you cannot be a big build wind turbines and scale them up with out heavy rare earths of which china has ninety seven adventures that i know they have most of it and as you mentioned outwith the solar panels now you have solar panel companies and the us asking per tariff because they can't compete with china there is so much more i want to get into stephen mayne so i'm going to ask you to stick around we're going to get right back to all of this in just a couple minutes i was evenly an author and chief investment officer at leeds capital management man we will have more with him in just a minute. all

right time now for word of the day where i break down a financial term or concept for our very smart viewer but maybe not the financial expert in our audience so we're stock because he is the bear so for years across this do a look that's hired her look at me to pick me up no you agree that's actually it represents the word of the day which is about it now a very clever. looks like you're picking up a few things from capital account it's hard not to it's still true great pictures ok. all right well thank you for a great big boost and save my year ok so as he said word of the day is commodities and coffee certainly is one that i take a lot of advantage of constantly and it's also something that we touched upon with our guest commodities and we will continue to now here's an example from the news today yet another one of why you need to know this word so according to an

investment manager that was quoted i believe in business week he said commodities have been under pressure for a very big macro reasons for the last several months and that pressure is ending so what exactly are commodities will the official definition of commodities are often most often used as inputs in the production of other goods or services the quality of the given commodity may differ slightly but it is essentially uniform across producers meaning for example here copper is pure copper no matter where it's mind and same for others now to put this more simplistically to give an understanding of commodities just watch this. commodities. a lot of these were cultural like we can make great. knowledge which is used to make. what you might find in the became in letters information. now they're not just

limited to agricultural products as you heard my last guest talk about it's oil gold copper also weak zinc corn coffee natural gas these are the basic building blocks of industrial production raw materials they're real things they cannot be replicated or reproduce they are finite so beyond just being used in production and investing they're also used as a hedge against inflation so as the dollar goes down if the money supply expands the price of commodities would go up so that's that is meeting this week so let me give you a hypothetical if they come out and say we're going to do more quantitative easing more money printing which expands the money supply well now you know what commodities are and you can even guess what would happen to their price in that situation it would go up. still ahead right here on capital of count stick around looking for some low price deals on airfare well before you pack your bags read the fine print on the airline before this happens it seems the landing gear may be just

too expensive but first the closing stock numbers. we just put a picture of me when i was like nine years old i just told the truth. i'm a contestant i am a total get a princess i love rap and hip hop is a planned trip. but it was kind of yesterday. i'm very proud of the role that the it's played. oh.

you know 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 realize that everything you thought you knew you don't know i'm charged is a big issue. what drives the world the fear mongering used by politicians who makes decisions to break through that it may who can you trust no one who is you know with a global missionary see where we had a state controlled capitalism is cold. sessions when nobody dares to ask we do our t.v. question more.

all right we're back with dr stephen lead in new york he's author and chief investment officer at leave capital management he was telling us before the break how basically your way of life as an american could be over because the u.s. is not fighting this war of resources that china is now there's so much more we want to get to with him so dr levy i want to bring you back into the conversation now before the break we were talking about china's investment in resources i want to bring up a map for our viewers they can show their investments because it shows how they span all over the globe if we could just bring that it shows their investments in power in energy in metals you mentioned copper this of course is in other countries as well you can see those red dots you can see a doctor lead but i'm sure you are well versed in this but our viewers can so three hundred seventy six billion dollars of investments all over the world if we could bring up the energy contracts to you can see those span the globe in many many

countries as well and then earlier you heard me dr levy play a sound bite from john bolton saying that the u.s. fights wars for oil so what's stopping the u.s. from doing what china is doing and just using checkbook diplomacy. i think basically our checkbook is pretty thin at this moment but i think even more than that is that we just don't realize how critical these conditions are i mean it's sort of like we're the proverbial frog being boiled in water that is you put the frog in water you gradually turn up that he at first. to sleep but eventually that water gets hot enough that the frog is dead we're somewhere lukewarm or a little bit above lukewarm and that water right now we just don't get how serious this situation is china continues it's not just these investments in china plans to spend over the next five years half a trillion dollars

a year on new energies and the reason they're doing that is because they have decided from their own research and there are a lot of articles affair to this and that that they cannot count on oil forever they cannot even count on coal forever that eventually these hydrocarbons will reach a point where you won't be able to produce any more of them are not enough of them that china can rely on so what they're doing is spending massive amount of money warlike money developing alternative energies nuclear hydro solar wind and we're just sitting there letting them accumulate the resources to do it i mean you know solar is a very interesting energy source lots of things wrong with it admittedly but it does work and when it works it's probably one of the cheaper energy sources you need silver to make solar that is absolutely the truth and china's been accumulating silver it for when you need a steel you need rare earths and that's things that china has been consuming and

accumulating. for electric grids you need copper and look goldman sachs said the other day again i'm repeating myself and then magically high copper prices could occur within the next three years that leaves no room for us to build out an electric. grid that would accommodate other kinds of energies i mean they really are there really are in a position of the nation almost already so it sounds like you're saying that by the time the united states figures all of this out the resources will already all be accounted for in the united states it's going to end up that dead frog that you were talking about but i want to switch gears a little bit because you were mentioning copper because gold is something that of course we've seen the price go up in significantly some call it a safe haven some call it ahead against inflation the federal reserve is meeting this week now so far the consensus seems to be that nothing is going to come out of this meeting they're going to say let's wait and see nonetheless it is always a conversation being have the public discourse is there going to be more

quantitative easing are we going to see more money printing if we do what does this mean for gold. well i mean to the extent that commodities other commodities not gold are scarce you're going to need currency that can ration these commodities you just can't have europe and the united states and other countries competing to see who can print the dollars the fastest in order to get oil and copper it doesn't make any sense that's a losing game that's where gold really enters the picture gold is really the only viable currency the only meaningful currency because they're not making any more of it mine a whole lot of it every year it's the only currency around they can truly ration scarce commodities and that's why you've seen gold in the eleven or twelve year bull market it's going to continue they're going to be ups and downs but i mean once inflation enters the picture in a real way i mean gold could even accelerate from here and again china is so far

had of us in china for instance you don't have to pay taxes on gold bullion that means gold is a currency in china in this country if you have a gold coin and you hold it for let's say year and it goes up twenty five percent and you created for something else let's say a piece of furniture you've got to pay taxes on the game a lot of taxes in china no such thing in china they have machines where you could put in literally a debit card and get a small amount of gold a sliver or get up to one hundred forty thousand dollars worth of gold and they have guards it cetera china is encouraging almost taking their populistic can relate as much gold as they possibly can because they see it they see commodity scarcity and as long as commodities are scarce gold is going to be the only currency that will be able to ration these commodities will be able to say who gets this and who gets that if you don't have gold you're really going to be out of luck

that dollar is not going to be worth a whole lot of dollars going to continue to lose value regardless of what. we are out of time but that was dr levy author and chief investment officer. all right we've gone through some of the heavier topics they could impact your life now let's go through some of the lighter ones so we don't have to end on such a heavy know with the american way of life ending as we know it so demetrius happiness is here our producer and contributor and shannon donahoe is in the control room as well to tell us what they think about this so sound is

a software program they do all sorts of different kind of communications programs that businesses use that governments use so because they are expecting this sovereign debt crisis in europe to put a damper on sales they are expecting to make up with that with a push with all these new governments springing up as a result of the arab spring is that i just think it's funny that you know you hear about kind of you know governments and oil companies benefiting from war but you don't always think of ok these you know software companies that are going to capitalize on new government but there's a great opportunity for for them to kind of expand as europe is collapsing as the debt crisis weighs on the concert of europe these companies and these internet software companies are heading south to the african continent to open opportunities kind of open grazing land i think we've seen this sort of during the times when human human beings margaret westward. and i think we're seeing in our with the unit

problems you know i think the big question here is if this is going to slow down new governments because i think it's a running joke with organizations that as a p. is installation an employment patient is a total headache and slows down everything moving on though speaking of slowing down everything. not. in wheels couldn't slow down this plane from landing and we bring it up this boeing seven six seven hundred thirty people on board made an emergency landing you see right there beautifully no wheels we were talking about commodities earlier rugby looked at the price earlier dimitri it's down from its peak but it is still much higher over time is this a sign of the times right i think so actually boring has a special program are they going to where they're offering airliners or operators airlines the ability to upgrade or or deal with their aging. landing gear without actually replacing it so you know i think he's going to call but

there's actually a market for this well i think people need to start getting used to this i mean gone are the days when you could just expect to land on large rubber tires and that costs money takes time and effort to air into those tires this is part of a new cost of instruction i think people just need to get used to so kind of coasting on the underbelly of the seven six seven so shannon would you think twice before booking a low cost bear after seeing this. i think so i mean even on regular airlines some of the landings like i get a little freaked out by but without wheels i think i would honestly get hurt because nobody was hurt but i was a god like flight three hundred plane southwest this is the only reason why we can make fun of this story is because nobody was hurt killed. speaking of nobody being hurt it's questionable just who was hurt in the next story and it's kind of just forget it herman cain has been accused by two women of inappropriate behavior of

course we know that the big question. is that good for business he had a huge day yesterday fundraising two hundred fifty thousand dollars was what he did and this is evidently one of his best days according to his campaign manager the bigger question to i mean is it didn't really do anything so bad. well if he was running for office in italy would be prime minister right now i know and ran run as out as an outsider to washington if this is true he's right in there with the insider i mean i think the whole thing with sex in america is a joke i mean all these politicians that's the it's a classic thing bill clinton had you know all got impeached over it and it's ridiculous i mean i think herman cain in fact is saying listen i'm going to take it i'm going to take it take you guys head on i'm going to use this as a opportunity to raise money so news flash he's a womanizer i guess everybody else is thinking what we are that this isn't such a big deal on that note we hope our show was a big deal for you to do it again tomorrow because that's it for today in the

meantime follow me on twitter at warren lester give us feedback at youtube dot com slash capital account nice comments are more welcome than others i'm lauren lyster and so next time from everyone here at catholic count have a good night. wealthy british scientists i. sometimes like this. market why not. come to. find out what's really happening to the global economy with my stronger or no holds barred look at the global financial headlines tune in to cause report. you know sometimes you see a story and it seems so you think you understand it and then you glimpse something

else you hear or see some other part of it and realize that everything you thought you knew you don't know i'm sorry market pacific ocean. i've . seen a piece.