good afternoon and happy friday welcome to capital account i'm lauren lyster here in washington d.c. and today greece's political drama continues with the prime minister fighting to keep his position the european union departs the g twenty summit and calling up with out the international support for its debt crisis plan that it was looking for so what exactly then are leaders like say u.s. president brought obama saying about the prospect of europe and acting its debt plan quickly and is planned on. having heard from our european partners over the past few days are confident that europe has the capacity to meet this challenge.

and careful words capacity might be to q one there meanwhile regardless of what politicians promise or hope political solutions will achieve behind the curtain are we seeing a bank panic already underway meanwhile in the u.s. unemployment its debt instead on a notch last month for nine point one to nine percent now before you get excited about the eighty thousand jobs that were added the economy would need to add more than three times that number of jobs every month for the next five years just to get back to pre-recession unemployment all right let's get a capital account. all right so the g. twenty summit in khon has ended and despite any politicians putting forward

a common do attitude in their speeches all eyes are on the eurozone debt crisis and the reality is the e.u. was reportedly hoping to leave the g twenty with international support for its euro zone rescue plan and has little to show for it today there is no deal for members to give them money they will continue talking about it well so we know where that's going to be determined we have no idea and greece which is central to the eurozone crisis and to this euro zone debt deal has a vote of confidence tonight in parliament where the prime minister's fate hangs in the balance and this could change the equation completely so let's forget politicians let's forget communiques what can we really expect average person founder of credit write downs dot com and our own contributor and capital account producer to me trick of minas are both here to tell us what really is going on so thanks gentlemen both for being on the show now first edward you were tweeting us

today and we were kind of tweeting back and forth because you were saying that the fact that greece's accent from the euro zone had even been mentioned was is seismic shift so this vote of confidence tonight with the prime minister could this be an earthquake rattles the entire debt deal. comes out i was talking to me too about this earlier i think basically. doesn't get a blue cause that's my view is that it just puts a shadow over the whole do you know if i were german or french i would say that doesn't work for us basically you have no government for the next month. we supposed to see that we're going to give you the money that it's you guys have to told you have to pay the debts that you've said you had to do the things that we've given you and that's it you know that would be that i would have if i would french german all right it. isn't the prime minister is not giving his. vote of confidence what do you think happens to the debt deal does it unravel in the way that they're

going to say it from is a good point but it would mean the other possibility is that they form an interim government and that the french and germans say ok if we trust this interim government as a short term solution to the elections and we. speak to the opposition leaders and i say ok we feel like we're going to lend you money and i think they can bridge the gap we can do that and hope things are going to fine otherwise i think what is really going to happen one way or the other is that they're going to use greece as a sort of example for the other countries in europe are going to say we're going to let greece go bankrupt we're going to have an edge of the eurozone and they're going to turn to portugal to turn to spain and italy and say look you want to be like greece you want to experience this sort of the pressure or do you want to take our advice and follow what we have to say and try for ever closer union ok well speaking of italy it's a really good time to bring that up because i want to ask if you guys think that greece is really the biggest problem or if it is italy a country with a much larger economy one hundred twenty percent debt to g.d.p. second only to greece and of course the i.m.f.

isn't going to help them they didn't get a deal on that they're going to supervise them they're passing their third round of austerity in three months is this really the bigger issue the one hundred percent that's the big issue everyone's always already said or always is. those are the big deal when they had the whole bailout from the beginning with everyone originally it couldn't help spain because spain was too big and italy was certainly not in the picture now that is in the picture there's no way so ultimately the e.c.b. has to get in there with it it is no other way to deal with the whole problem because the yields are spiking they're not going to get in there meaning print a bunch of money exactly to be sure what you think that well i mean i think ultimately it's not going to work because i don't think that the people in europe or at the center of europe is going to. i support the idea that the c b especially the germans are going to be willing to backstop of those financial losses because they don't really control europe's fiscal i mean italy's treasury don't control the

government spending so they can't really come to their parliament say or the surplus countries come their problem and say look don't worry we're going to absorb these losses and monetize italian imperfect. and it was going to get their house in order we can't be can promise that because they don't have a centrally you know organized europe i mean i see them what'll happen politically in italy i just saw a report i think up an answer times is reporting that the finance minister is telling berlusconi that he's got it stepped down a bit just riva knows what kind of political turmoil. basically. it's. all the german banks which i've argued and sixteen billion dollars of exposure to. that they would feel as well the whole thing would. it would be a major global depression. therefore they're going to print money. that's going to you know so they can let greece go but not italy exactly ok speaking of too big to fail regardless of what we've heard politicians say about this and just

to highlight that i want to play what president obama said today about how important this european debt deal. then and the. events in greece of the past twenty four hours have underscored the importance of implementing the plan fully and as quickly as possible. ok so it's so important such a big deal he believes they can get it together and do this but aside from what politicians are saying what about what's happening with banks i want to bring up this chart because it shows that foreign banks are parking cash at the federal reserve and you can see that right now they're doing that at the same level that they were in two thousand and eight times i've believed in brothers collapse and now you mentioned too big to fail so my question is about the banks are we already seeing a bank panic well i think the data that i've seen so far have shown that the panic is really within the meaning that you know if you agree with you i was perhaps you

might park your money in germany as an example but in terms of the macro flows none of the flows that i've seen except for that chart have shown that there's any flight away from the in fact if you saw that sort of flight you would expect it to marshal impact on the currency you would see the taking and we haven't seen that yet so i think that it's. you know people going from italy to germany for ireland to austria and things like that that all these foreign banks are parking their cash somewhere safe that they can't go bankrupt what does that signify i mean three i think it means they're scared i think it means that they're worried about their counterparts and they're saying we're going to spread we're going to park our cash. and that would decrease liquidity in the marketplace and that would be something that could be a harbinger for some sort of credit freeze or some sort of freeze in the capital markets i think the way that it could affect american banks would be certainly on

the girder side been a lot of american banks have been hedging positions or helping european banks have their positions so i think there's a interconnectedness in general the global economy here what i would say but i think that is one way that it could spread to the u.s. you can disagree ok you know what you're saying you know why i mean i really i realized i'd like to think that you could have some sort of derivative it's well. even with greece and some of the credit default swaps i mean i was actually laughing when you played the clip from obama because everyone knows that the reason that the americans are interested is because american beggs have written that huge about the credit default swap protection for the likes of greece and spain you know i don't know if americans and everyone knows that this is the issue because the first question that obama was asked at his press conference after he spoke at the end of the g. twenty was about his reelection campaign and i was just sitting there going is the media in the dark today don't understand the implications of everything that's going on in europe right now if you had to explain to them in one sentence because

we're almost out of time but would you want to tell those reporters that the most important thing they need to be worried about with this euro zone crisis for the u.s. the most importing they have to be worried about is the global meltdown the banking sector as i mean it was basically liquidity comes to a halt if we have players like dexia for instance going bankrupt the eventual goal things is going to come to me three months or is what they're going to the point system is leveraged and this is the hands on liquidity it could continue to being able to turn over and turn over loans so if people get the panic if executives of people in the first management in the trading floors whatever they begin to panic they could pull pull pull the strings on certain deals and the whole system could come under a massive not a good measure under the leveraging global meltdown of the banking system you hear that mainstream media it is not obama's reelection campaign in fact that is probably the last thing you need to be worried about right now i appreciate both of

you guys for being on the show and clearing this up for both of us we will have more with edward harrison on that u.s. jobs report in just a minute. all right now time for the word of the day where i breakdown a financial term or concept for our very smart of your but perhaps not the financial expert in the crowd so edward you can stop listening right now today at word of the day unfortunately star as our deliverer is all tied up but lucky for you i found out ahead of time it is reaper and let me give you just one example of how it's being used in the news right now. we took two hundred billion from the top when you start to stabilize essentially devotional markets and we put these shadow banking systems are i'm sure you show me your. so they're talking about the repo

market so let's talk about what are repo's and bring up the definition this is a form of short term borrowing for banks or for other financial institutions the party engaged in the repo sells securities together with an agreement to buy back those securities at a later date for a higher price in return for cash now and repurchase agreements which is a repro are commonly used by banks to meet their short term funding needs now reports can be used for all sorts of things for example it's a tool commonly used by the federal reserve to control short term fluctuations in the money supply so now let's bring up that chart from earlier because i was talking about it my last segment and repos are involved so this is a reverse repurchase agreement in the case of foreign banks which they are parking their cash at the fed it's the reverse repurchase agreement of is giving them cash in exchange for securities or for collateral and the fact that they're doing that

indicates that they basically want to park their cash somewhere safe they can't go bankrupt which the federal reserve is as opposed to other banks which perhaps may give them more return on their investment and that is why a repro is important. now still ahead right here on capitol hill don't go away the u.s. unemployment rate may have gone down but the u.s. economy is nowhere near in the clear what does this mean for millions of unemployed americans we will have more with edward harris and but first here closing stock numbers. we just put a picture of me when i was like nine years old i just tell the truth. i

confess and i am a total get over and said i love to rap and hip hop is excellent and pretty. but he was kind of the jester. i'm very proud of the role without you as playing. oh. you know sometimes you see a story and it seems so silly you think you understand it and then he blames something else here so you saw the part of it and realized everything is ok if you don't know i'm trying hard luck and was a big picture of. what drives the world the fear mongering used by politicians who makes decisions to

create probably thirty people made who can you trust no one who is you with a global missionary see where we had a state controlled capitalism is. saxon's when nobody dares to ask the we do our t. question more a way. the books are. welcome back ok so jobs numbers are out for last month and unemployment engine down from nine point one percent to nine percent they grew up the economy added eighty thousand jobs this was less than expected this was a weak jobs report but we can spend months and zero had crunched the numbers and the u.s. needs to generate two hundred sixty two thousand five hundred jobs that's

a lot more than eighty thousand per month to return to pre-recession employment by the end of an obama or whoever has another term of the presidency so over five years so let's bring edward harrison back on founder of credit right counts dot com to tell us frankly if there is any hope for millions jobless americans because that's really what the question is here so one of the big takeaways at work for me is that these unemployment numbers continue to show that government jobs public jobs are where we're seeing hammering and people letting go and it was the same trend this last month so how concerned are you about this aspect of the unemployment was concerned the economy is not going to get better just put it in perspective because we had eighty thousand jobs that were actually arguing one thousand jobs in terms of the revisions from the prior two months so it's all the navy does not agree but if you take a look at over the last six months you have sixty thousand jobs over those six

months that are being i mean that's not going to take that's not even take care of all the people coming into the labor force so that's not going to cut it and so eventually we're going to put in that sort of situation is people won't have the money to spend in the congress will rule one thing about this particular report that you should notice as well as that the wage gains were it's not as if not only people not getting a lot more jobs are not making anymore but other people are making money you have to get the growth so it's not just about you know. people not having jobs it's also about any comment. that needs to come from people having jobs and spending money for example and you know if people are not making more money for not getting more jobs then the economy doesn't grow and in a situation where the private sector is highly leveraged meaning that people still have a lot of you have asset prices which are somewhat stable was it that's a problem because basically the deal which you can continue if we have some sort of

pickup in the economy ok speaking of this joblessness is not ben bernanke even this week when he came out and spoke after the federal reserve meaning said meeting excuse me said that he expects this bad unemployment situation to be the norm for years every time obama gives a speech at the g. twenty he did it again he is selling his job stimulus his jobs program as the solution this has been dead on arrival so far in the senate so what can or should anybody in power in government at the central bank be doing right now to change this will ultimately i think there's a big debate terms of whether or not the economy needs the new or doesn't need stimulus. what we need to see is we need to see private sector debt levels fall but it was better than so that you want to have growth the question is do you get it from the fiscal side you get it from the monitor's. money is at zero percent the

fed is out of bullets in terms of the interest rate so they're going in with this unconventional monetary policy on the other side the government debt levels of got up so much that deficit hawks are saying stop stop the person we can't do it we're going to cut government so when you talk about the government jobs being basically if you have people who are saying that we've got to. cut government jobs there's a we need to suck money out of the economy and therefore they're automatically say we're going to have a recession we want a recession is basically what they're saying so you're saying when they fire government. they're saying we want a recession with the current government workers is the equivalent of saying we want it was. because if you suck money out of the economy but reducing the amount of money that people have to spend that means a recess but yet they do it every month. every session it's something that when politicians and when leaders and when someone like timothy geithner has talked about the us tipping into

a double dip they talked about europe and said that that could be the tipping point do you think that that is legitimate or do you think that that is an excuse for the the economic problems already existing at home like the joblessness that we're saying or talking about it's a toll excuse me it is legitimate but it's an excuse at the same time meaning that europe is the epicenter of everything that we're talking about. it seems you know i've been looking to the post i would say that seventy percent of the posts over the last week or so are probably about europe as opposed to about the united states that's a huge flip from what we had say a year ago or six months ago definitely so there definitely are definitely problems there and they're going to impact the states but the united states is a very large economy and so therefore what happens in europe is only relevant as far as the banking system and ten generally in terms of trade flows what's really relevant for the united states is what's happened in the u.s. so what happened in the u.s. as we just said is there's no job growth people are saying government spending that means cut jobs and therefore. a recession and if you have

a recession in the midst of. you know high debt levels in the economy in the private sector that's going to cause do you love with it it's going to cause an asset price to go and it has sort of a spiraling effect and just really quickly because we're almost at a time when you're talking about jobs and you are and you know you're in finance are going to finance you write about this every day and you talk about it in terms of economic growth and deal leveraging and all of these kind of you know economic models is that how policymakers are sitting there thinking about this are they ever . sitting there thinking about people's lives that can't eat and can't pay the bills and have to live well personally i think that the way the makers are thinking about is what gets me to the next election ultimately the policymakers are concerned about the political cycle in the political cycle is that if the economy doesn't grow we don't get elected and the people who are saying that we want to

recession are saying that when the economy doesn't grow they're going to blame it on the president and therefore he won't get elected so it's almost as if people are saying we want obama in the only way that we can do that is make sure that he's morefield. he presently seems to be and so i think that's really what it's all about it's about politics has nothing to do with you know models right right ok not economic models not people but simply power that was edward harrison founder of kind of right down stuck on. thank you. all right so we've gone over heavy things are global banking meltdowns just as one example so now let's go over

a few of the stories that are so important to know about but just because it's a better way to end your friday so to meet your coffee and as our producer is back and shannon donahoe our other producer is in the control room because we always want her and has take opinion especially on this next story so the owner of a large southwest alabama car dealership was derided by a competitor as taliban toyota and he's actually been awarded seven point five million dollars in damages after a jury trial. awarded it to him for his slander claim so ok this is actually taliban in a toy i don't know if it's what this guy was looking at when he was goes were actually on the walk. what happened was these guys who discovered them on their. you know i'm sure this guy was going to. go i was a rainy and he was pretty middle eastern. so this guy from

a competing toyota company. was like was the guy over there. he's actually a member of. member there's a supervisor says the money i have a brother over there. it was really florida florida the first car dealership was then the second dealership was in pensacola florida wasn't was the headquarters in pensacola thought florida branch but the guys we're splitting hairs here i think the bigger picture we were just talking about capitalism and collusion and am the knobbly i mean was this this guy's way of wiping out the competition by slandering his his competitor and does this show that maybe that doesn't work and that there is fairness that is within the system not a big settlement. and everything you could throw at this guy because we go. through more careful in the work it's pure free market. i think it puts

a whole new meaning to sleazy course. yeah i mean it's pretty loud pretty down and dirty ok let's switch gears to get down and dirty. this actually is ok he's down and dirty looking gear as if we can look at that so basically starbucks not profit jump by twenty nine percent it's reported earnings because of higher traffic higher bills per customer now analysts attributed this to the success of their loyalty program but gawker points out that they've been investigating getting reports of a war on not literal hoboes but laptop hobos as people who sit and fill seats all day on their laptops browsing craigslist or watching porn or whatever so does is this really what their success is about the. a laptop so this is a. pro shannon that's very that's cool that is very you know apparently this whole thing that these guys were hoarding all the outlets right there were they were

these guys are taking all the spots that people live near you may need to do some but they were there the whole day and they were surfing on sorts of course they were surfing on craigslist so they were doing all sorts of other things that really you know you should be doing if you're out you know having a coffee got here is talking about your i people who park and work and laptop who are in the outlets and don't leave we have been bringing down starbucks profits evidently according to. their coffee this way but i think this is what the point is that i think this is clearly why starbucks has been able to crush in this third quarter they said no more hobos no more people parking their lot of them just free writing off of our internet we're going to force our customers require more of our coffee and i think it's good i think this is the way it is they don't want starbucks to be people's you know second living room or whatever they wanted so. this is another big chain mcdonald's ok so basically taking occupy wall street

to another level of class warfare some are from this across the board of trade reportedly blanketed occupy chicago protesters with hundreds of mcdonald's applications mocking demonstrators dimitri yeah i mean fair it work was guys there's been have been like signs of the when to say we are the one percent and like the last thing spam e-mails and flyers that i get for the purposes of the progressives they want apparently so this is kind of like the next thing was that if you if you're a problem here go work on the grounds but but here's the thing because they obviously haven't done it no they obviously haven't done their homework because mcconnell had a day of hiring a national blend in april a million people showed up for what ended up being sixty thousand jobs they had a better chance of getting into harvard than getting a job in a donald so do your homework before you. dump on occupy wall street and with that that's a car so happy friday have a wonderful weekend to get you through until monday when you'll see us again please follow me on twitter out more and less give us the back on the show at youtube dot

com slash cowboy calley you can see all of our episodes in interviews there i'm more or less there from everyone here at capital account thanks for watching and have a great weekend. publishers that so much as i was about to be doing those i'd like to listen to give it really

be a win for the party despite over at least it was twenty years ago the end of the communist party of the soviet union was the final step before the collapse of the u.s. . will. remain you the latest in science and technology from the realms where. we've dumped a huge earth covered.