why not canada. find out what's really happening to the global economy with max conjure for a no holds barred look at the global financial headlines tune into cars a report. good afternoon and happy monday welcome to capital account i'm lauren lyster here in washington d.c. the eurozone crisis comes to america's doorstep literally leaders were at a summit at the white house where president obama is expected to press them to solve the sovereign debt crisis now the merkel's and the sarkozy's of the world aren't there these are leaders like european council president herman van rompuy oyo don't know i'm here is an introduction from n.e.p. nigel for raj. i don't know where george really once said this is not the charm for him that should lose but the time should. go to the right just so you go

to the italian people. now then run boy was that quote unquote unelected man but we will fill you in on everything you need to know and as leaders particularly of the western world have been first scriabin fiscal austerity on the one hand turns out the printing presses have their role in on the other one central banks across five continents have reportedly turned to monetary stimulus to avoid a global economic slump easing interest rates the most since two thousand and nine but is a working and it has been ten years since enron collapsed what remains of the legacy well we all remember the enron one stood for prosperity then came to be known for more for corporate scandal we tried going down we will show you what has become of the enron but let's get to today's capital account.

so the big question was the eurozone debt crisis solved behind closed doors at the white house today i doubt it judging by the press releases that have come out seems like there's good reason to doubt it but here were the people who were trying to summon included u.s. president barack obama secretaries clinton and geitner and on the e.u. side you have people like european commission president jose manuel barroso and herman van rompuy now if those names draw blank stares just because they are sarkozy or merkel does not mean that they're not wielding major influence allow me to give you a little insight into that i'll play more of what nigel for raj said to her minivan run for the european council president european union president. again as

a member of european parliament also one of our guests. i think you'd be the cat's assassin of the nation state democracy but you're not of the will you roll the ball you better don't shoot you i don't like when you originally said this is not the time for elections but the time for actions watching gold today gives you the right to say that to the italian people. so i now have a little insight into what he's been up to he's what you could call a technocrat and speaking of technocrats this all comes at a time when economists jock tallie former president of the european bank for reconstruction and development has been quoted saying there is no more than a fifty fifty chance of the euro surviving until christmas now meanwhile there have also been rumors or rumblings of an i.m.f. bailout for italy now the i.m.f. has denied this but wooden i.m.f. solution make it a very merry christmas for architects of the euro zone project i will explain but i

want to get edward harrison into the conversation he's founder of the very well known website very valuable to us to hear a capital account the website is credit write downs and we're going to talk about all of this edward thanks so much for being in studio today it's good to have yes i see you again now of course despite the fact that these press releases i've seen coming out don't seem like there was anything earth shattering at this summit and it is an annual summit from what i've read from reports do you think there was a sense of this being an emergency summit due to the kind of you know the how large the magnitude of this euro zone crisis without a doubt i mean the u.s. wants to become involved in some way and what's happened over the weekend we got a flurry of activity i think basically what we saw is various parties try to throw something up to see if it sticks to the wall what the public reaction is and then based upon the we're going to narrow down the number of options to a limited number and the u.s. has this take it to with the whole banking sector the fact that the u.s.

economy is at stall speed and potentially could dip into recession. you know broc obama wants to get his foot into the door and say you have to do something that's necessary we want to have a voice in all of this is well i want to get to that but you you you said something which struck me which is that there are you know throwing things on the wall seeing what sticks in what the public reaction is so my question to you when someone like a tali comes out and says there's a fifty fifty chance that the euro will exist on christmas do you see that is valid prediction or do you see that as trying to put pressure on leaders to do something or put pressure on people to accept something that's both definitely you know really what he's trying to say. here's what's the here the bad things that could happen if you don't make the grid so he's as much predicting what we're. saying that if you don't do what we think you should do then this is what's going to win and so over the last two weeks ever since italy has been in the hot seat the whole

thing has spiraled out of control and it's gotten to the point where you have people like him saying that wolfgang one child who is a german economist who writes in the financial times he's also said the exact same thing in the last day or two yes i think he's got a matter of days before they are exact so you know it's a dire situation and ultimately they have to act in the next little bit or go things with ok so let's talk about who they are because you mention of course italy which has become this big major problem and there are rumors that came out that you know maybe italy was going to get a six hundred euro bailout from the i.m.f. or was asking for one the i.m.f. came out and said hey that's not true but would european leaders love an i.m.f. bailout because that could make it look like the e.c.b. isn't printing money and that seems to be the sticking point right exactly that's the particular rumor that i think is probably just a sort of float there just floated out there to see what people think i really do

think that there. cooking up the scheme but they really sort of created this leak in order to see you know what would be the appetite especially in the united states where we have elections coming up and people are very resistant to the concept of the u.s. billion the europeans so they want to put this up in the air while the same time they have other things that are that are going on i think the more credible theory is that they're going to have a showing in like agreement showing in was the borderless control within the european union that they did fifteen years ago or so and what they they did there is they had a subset of the e.u. agree to these bilateral agreements to have no borders and then eventually they widened it out to the rest of the so you see a united states of year at kind of a solution where they do move to more afterschool unity definitely removed more

fiscal unity but it's going to be a long german laws which is that. a will the quid pro quo for fiscal unity is over it. though they called oversight but really it's sort of dictating terms in those countries that are not meeting the grid and so that would include countries like italy and spain the way i think that it's going to happen is they're going to say look greece ireland and portugal they've already got niamh of bailouts the i.m.f. because of political reasons probably couldn't give more money to italy and spain and the united states would go against that and it would be a very politically hard thing to do in a very short period time they just don't have the money so you do not so you think the united states is opposed to an i.m.f. bailout and that's why it won't happen i think that politically would never fly in congress who basically would have to cough up a lot more money in the united states to give to the i.m.f. in order for this to happen and there just isn't any time for that to happen can you not before christmas and not at all why do you think why do you think christine

legarde is in latin america trying to get more support for for your. sovereign countries in the debt crisis well you know all contingencies have to be played so they're working on all these different contingency plans the e.c. be the germans the french everyone is working on their own contingency plans and so if one plan fails and the have a backup plan based upon that and so even if we get this the sarkozy and merkel thing then perhaps over the longer term the i.m.f. could still get in there in some way shape or form if necessary so they just want to have that just just in the in the background in this area that you think is going to play out the e.c.b. is going to print money right or issue euro bonds well here's what i think is going to happen is that they're going to ireland portugal and greece they already have i.m.f. bailout so we're not going to do anything with the real countries that we care about now are italy and spain so we are going to get by a lot of agreement and

a bunch of the other european countries like germany the netherlands france austria finland if possible we're all going to agree that a certain percentage of our existing debt will be the so-called collective that will put it into this supernatural super national euro bond structure but will do that only because the e.c.b. has room has already bought the existing debt so it'll be a replacement does he think the french money. will will print money but it's really in exchange the debt swap so there's been a bonds that are issued by national governments and issuing on the back of that an equivalent amount of bonds from the collective so they'll be buying up german that will be buying up italian and spanish debt so the u.s. and the euro buys that debt from the nations. the e.c.b. buys of that debt creates a special purpose vehicle whatever it may be and they they launched that debt which

is back. germany as well as the other coaches all right we'll see if that happens we'll see if they can get that done by christmas that word harris and all that but i have to have you back on to see if this pans out that was edward harrison filling us in on what he thinks is happening with the euro zone crisis what you didn't hear behind those doors at the white house today. right it's time now for word of the day where i can break down a fanciful term or concept for our very smart viewer but maybe just not the financial expert in our audience and in the spirit of our guest at harrison who has the web site credit write downs and also in the spirit of the news today the word is right down as we can see it is an action today with this business week story

take a look so greeks derb their banks which are predicted to start reporting third quarter losses today may also disclose bond write downs as a tussle with the government over terms of a debt swap related to the nation's bailout package so what is a write down this is actually one of the more simple definitions i've given you it's reducing the book value of an asset because it is over valued compared to the market value and that's really the key term so let's see how this breaks down so say you have one hundred million euros of greek bonds on your books and you're a bank and these are your books but the market is priced them in as being worth half of that so if you want to account for the market value you have to acknowledge it's worth half as much as you said it was worth on your books you have to divide it by two you write down that investment that asset by fifty percent and that is a write down now here's the thing when a bank is forced to write down the value of assets like this it's forced to

acknowledge their losses and if those losses are large enough it could throw into question the bank's ability to meet its own liabilities and remember a bank is judged by the size of its liabilities in conjunction with the size and quality of its assets so that scenario in turn leads other banks and creditors to demand both better quality collateral as well as higher interest rates from the bank in question now the game finally ends once the bank in question is no longer able to fund itself in credit markets being driven to insolvency so this is why credit write downs are important and why banks are desperately trying to avoid them . stick around still ahead here on capital account as the u.s. prepares to pull troops from iraq you will never guess who is rolling in cash and we will tell you after the break but first their closing stock numbers.

were just put a picture of me when i was like nine years old i don't you know look truth. i confess i am a total get of friends that i love traveling hip hop music and. he was kind of the guest today. i'm very proud of the role without you she has played. you know sometimes you see a story and it seems so you think you understand it and then you glimpse something

else you hear see some other part of it and realize that everything is ok you don't know i'm sorry welcome is a big issue. what drives the world the fear mongering used by politicians who makes decisions to break through it's already been made who can you trust no one who is human view with a global missionary see where we had a state controlled capitalism is called sash. when nobody dares to ask we do our t.v. question more.

welcome back economic growth as you know has been stalling and today we saw the international economic organising organization the o.e.c.d. has slashed its growth forecast of thirty four countries to one point nine percent that's down from two point three percent as it previously forecast the biggest risk to the economy in their eyes i bet you can't guess ever can you guess. the mounting concerns over the survival of europe's monetary union and that is basically the biggest risk in any report today i would i would validate as it is so despite all we have heard about fiscal authority or austerity excuse me at the same time in the west over the past year on the flip side we're finding out that we have had monetary easing central banks across five continents have undertaken the broadest reduction in interest rates since two thousand and nine to avoid a slump but is it helping and what is the cost i want to bring edward harrison back and of credit write downs to talk to me about those things because edward we have

heard so much about austerity it's really been kind of the pervasive story over the last year in europe and then in the u.s. debates that we've seen at the same time that we've seen now with this report that across the globe central banks are easing to the greatest extent that they have since two thousand and nine my question to you is this helping when we still see countries like france for example which has been around for hundreds of years aaa rated and it's still very expensive for them to borrow but it's not that it has to do with the orthodoxy which is to say you know government is spending is bad it's politically motivated all that stimulus you know it's very interventionist we don't want. to send troops. because they're better because of the different stimulus. it doesn't work the reason it doesn't work basically is you have to go to the guns of the fiscal union you have the monetary this school aged the. deficit spend which actually net financial assets to the

the private sector they're creating money when you talk about printing money they're actually printing money by deficit spending because they've created a deficit which is a surplus for the private sector the central the other hand all it does the shuffle money around so whenever it prints money what it does is it bonds existing assets in the private sector so there's no change to the net since they're not actually printing money so to speak they're really creating the asset swap so unless you have some sort of of of aggregate demand impulse people buying more stuff. you're not going to get anywhere you're just creating a shift in private portfolio preference and we see that these growth estimates keep getting cut back to central banks and what they do you are they essentially papering over situations that keep people from knowing the true value and financial markets the true value in assets and in banks the people need to know and i want to

bring up you know in the united states as bloomberg report that's been out there showed that the fed was making seven point seven trillion dollars in secret loans to banks this was as of march two thousand and nine that they'd made this amount and so it was making base look more successful than they were and i guess the argument is that lawmakers would have chosen to regulate the banks differently had they known that. basically what the fed has done is they've papered over the problem by trying to load up the banks with a bunch of cheap money and then therefore the thinking is the banks would lend that money on to the private sector to people who need it but the reality was is that you know we were in a recessions last depression and people just weren't borrowing money and the people who wanted the money are needed the money they weren't even credit worthy to begin with so you're not going to get any credit creation it's not going to do anything except for cause these banks to go and speculate drive up the price of oil and

things. it's complete nonsense speaking of that where we now have a lot of people that are predicting q e three some on the show some of the mainstream at j.p. morgan poll showed eighty percent or something of their fixed income manager survey believe q e three is coming in two thousand and twelve you have sixteen of twenty one primary dealers think the fed will start five hundred forty five billion dollars worth of buying mortgage backed securities is that going to help average people you know the mortgage backed security thing is interesting because you could call it almost like the equivalent of what the e.c.b. would be doing if they bought up italian bonds you called quantitative easing in terms of creating fiscal support for. individual states just like in the e.c.b. so that would be an interesting ploy not that i would necessarily think it's a good poor but it would actually have an effect in terms of the ability of those fiscal agents to do whatever they wanted to do you know from a spending perspective but in english i'm an average homeowner i want to refinance

or i want to learn is that going to help me i mean mortgage rates are already incredibly low as it is so why would their buying up even more have any effect with the lowest mortgage rates that we've had on record so this is making quickly edward while we're on central banks i want to ask you this why do you think after for so long of central banks being sellers of gold for two decades they now are becoming net buyers and we see emerging markets leading the way russia mexico we saw if we can play the video of venezuela repatriated their gold to celebrations on the streets with tons of crowds cheering and so excited that their gold was back because people are free the only way to get out of this huge debt problem and it's mostly a private sector debt problem the only way to get out of it is to just flood the economy with money and old people think that's going to debase these currencies and they want to be hedged against the currency the basement and so therefore. they're

taking the ultimate which is gold but do you think that just broke i need a quick answer loading up on this gold makes them feel that somehow their currency is more backed oh yeah one hundred percent they think that you know rather than have the us dollars as their reserve currency they can have gold as a reserve currency and therefore would push comes to shove they will be in a much better position all right that was ever harrison thank you so much for being on the show it's great to see you he is founder of credit right downs dot com. all right so we have gone over europe we have gone over central banks let's talk about something that i don't know it's

a little more upbeat in some ways i want to bring in our producer dmitri kofi anan us as well as shannon donahoe in the control room to talk about these stories with me because even as u.s. the u.s. government may be pulling troops out of iraq you will never guess who is cashing in on the rebuilding of the country if we could please show the screen our viewers may have some guesses but it is big banks they are going on cashing in head of one major global bank was quoted in the financial times as literally saying this with all the oil wealth iraq has everyone seize the opportunity it's virgin territory of the big international banks. so guys is this what we have after the u.s. has spent three trillion dollars on the iraq war according to some estimates you have you know guys like this going into cash in the model mr works if you're not going to use or you try to go with the banks before you go with the guns but if you

got to go with the guns than some of the bankers or the loans in these loans as a way of kind of manipulating the government to get them to do what they want so i'm not surprised. you see blankfein and jamie their show their their culture their coming out of the tank is that right that was actually caught in baghdad with. they were caught in action doing that exactly shannon do you think that there's any risk that would be too much for bankers who want to make a profit. i don't know if it's a risk if they are a risk for iraq so that i was honored everything here so they're going over there and everything to. transform one so you are on to something ok moving on this tank that you saw there might have been helpful for shoppers on black friday if you saw any of the footage like we played on friday of shoppers clamoring for cheap deals now target opened at midnight as maybe you know and they prepared customers for shopping with this ad.

maybe they should have prepared their employees better because it looks like the shoppers did just fine of course the headlines today are that black friday was surpassed last year in spending there is a lot of money that was made but unfortunately a thirty six year old target employee drove her car into a twenty feet a foot deep can now after working that night shift that we were telling you about so i mean we're on it is the casualty of black friday you have the poor employees who are so tired they're driving into ditches after work they forgot about their employees who were so busy trying to get the customer pumped up that was like the rocking horse on track for you had rock used team trainer rock human you have the russian dream the russian guy and you had these two people in competition with the

staff they weren't prepared man they were prepared that in the what was going to come at them they had some pepper spray but i mean they were part of the they didn't know that they were going to have pepper spray from customers who you woman poor woman probably was dehydrated exhausted flabbergast the driver of the cliff but come on are we just target care more about their customers than their employees come on shannon help me out here. a lot of employees created and. that's right thing in order to get out of working at. customer yeah yeah they protested and look because this is what they get they knew that something bad was coming so even if something bad coming let's move on because it's a very big anniversary today it is the ten year anniversary sense and ron's collapse after would be rescuer dynegy backed out of an eight point four billion dollar deal to take over what was once the world's largest energy trader and became the biggest scandal ever so let's first recap a little bit of where people are now will c.e.o.

kenneth lay he died actually while vacationing in two thousand and six this was before his sentencing for accounting fraud and the c.f.o. where he is the well he has a projected release date from prison december seventeenth two thousand and eleven so i guess you have. heard the last of him but the big question what happened to the famous and ron well one of them sold for forty four thousand dollars at auction back in two thousand and nine i think it was before that but anyway it we found it it is at micro cash computer store in houston and they were nice enough to send us this picture of where it sits so very quickly we're out of time anything you want to add to me terry yeah no it's from the big stories words come what you think is the because of those well we found that we were still looking for come away don't be so sure complain but there you go but now you know where they is and that's unfortunately all we have time for there are many more jokes we like to crack on this but we'll have to let you do that and you can do it on twitter feel free to

send them to me at lauren lyster and give us feedback on the show at youtube dot com slash capital account i'm lauren lyster and from everyone here until next time have a great night. 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 tarp is a big. issue is that so much of it and there's a huge decision on the market to forgive the spring a state appointed investigation claims berean used excessive force as it had to

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