good afternoon and welcome to capital account happy friday to i'm lauren lyster here in washington d.c. and it's d.-day for the euro zone but is it crisis on or crisis averted while euro zone members sign on for more fiscal unity and analysis ranges from success to total failure and does anything on the table really get to the core of the problem for one thing the u.k. is foregoing the fiscal unity deal and this video has some saying france may be forgoing its well known advocate.

of the load. to see that snub and countries and banks are preparing for the collateral damage of a collapse of the euro nonetheless reportedly contingency plans see countries like ireland evaluating the need for additional printing presses while the swiss government is studying capital controls in case of a tidal wave. there was that the tidal wave of the euro collapse threatening to wipe out other countries export economies as capital flows into them and as pundits economists analysts analysts size of the crisis and the solution to global and market and personal impact from this side of the atlantic we get the view from one of the country's most direct and on the other side of the atlantic we'll speak to greek economist yanis varoufakis in athens let's get to today's capital account.

so today was supposed to be d.-day according to some for saving the euro or seeing it collapse with the summit that is wrapping up so is the deal a success or failure in averting collapse of the euro or the default of euro zone nations or the bankruptcy of banks saddled with their debt well it depends on who you listen to or what headlines you read and if you follow the coverage of the u.s. stock market each day has been hinting upon decisions in dealing with this crisis every word of politicians u.s. stocks little changed on concerns over your a bailout rating then you have u.s.

stocks declined as e.c.b. president damps bond by speculation oh then people are excited u.s. stocks rise on consumer confidence and european debt agreement so what exactly is the reality of what came out of this that you have the seventeen euro zone members agreeing on closer fiscal integration with tighter rules for budget discipline now the deal though will have to be done outside the e.u. framework because britain vetoed the pact other agreements were efforts leaders believe will ramp up of fire wall and curb contagion from the debt crisis crisis this includes things like the two hundred billion more euro for the i.m.f. and moving up the start date of the five hundred billion euro european stability mechanism but aside from all of these things does any of it actually solve the crisis well countries in banks reportedly have been coming up with their contingency plans in case the euro collapse none the less ramping up their printing

presses but let's get the reality of what's going on here from athens from the heart of the country most affected so we have you on this very focused with a c. is professor of economics at the university of athens also the author of this book the global minute america the true origins of the financial crisis and the future of the world economy and we are so high. to have you on the show again it's nice to see you now before we get started i just kind of want to get something out of the way i'm gonna pretty much assume that you don't think this is a solution to the crisis because you believe ultimately this is a systemic crisis and a european banking system solvency crisis at all timidly this solution addresses neither of those issues adequately so correct me if i'm wrong. i'm afraid you're not wrong approach ok so then let's get to the first question now that that is out of the way because you have been proposing your own solution for a while and in fact you gave a speech at the european parliament where you sense something that many would

actually probably find quite shocking you said europe doesn't have a debt crisis it has a crisis of capital so what do you mean. who would it mean if you look at to use them as a single economy which it is in a sense because it is a common currency like the united states is that those whom the eurozone is a euro zone. if you look at the aggregate. especially as a ratio of g.d.p. you know many times a much much greater. crisis in europe does even worse and yet no one is talking about the breakup of the yen zone or the break up of those why we don't know the units known as the kind of. disintegration there is is because the structural crisis ok and one of the big differences of course you have all of these different countries which are dealing

with some of them indeed their own debt crisis and one of the solutions that you have is for investing funds from the surplus countries into the deficit countries and state directed investment but you've also been really critical of the political establishment in europe so why should we trust politicians and bureaucrats to decide how to redistribute capital in europe when they have been responsible for so much of the problem. the sad answer is because we don't have an alternative markets won't do it for us the don't do it in your country don't do it in any country it is political systems. of different shapes and forms into it for instance the united states of america it's to a large extent the pentagon which is distinctly distributing surpluses from the surplus surplus regions of the united states into deficit regions by demanding of poland and other large contractors of the pentagon. that facilities for building

new fighter jets and so on are built in at least some extent in deficit zones in order to stimulate economic committing those loans so as to ensure that the surplus zones continue to provide services to the rest of the united states in the night concert is it was president whose fault could. affect it and implemented a system by which savings would be shifted to investment and investment would this proportion really be that acted towards the deficit zones and said this bill is a big but in a similar way that the game but we can't do without it politics is a dirty game indeed but just looking at one of the examples you gave as you brought up at the r and of course the new deal there but you know at the end of the day the u.s. debt back into recession in one thousand and thirty seven l. world war occurred before the united states got out of it you're so so right. why did the united states deep back into recession fifty seven thirty eight

it was because the a stallion logic. reared its ugly head again there on the thirty six when there was word that mr asian got cold feet and started feeling the debt. again that is out being. the stimulus packages that will be utilized previously not as how doubts but as a means of sifting and by a lot of savings know where to go into productive investments because this is the main problem with crisis prices appear as. cases of debts run out of control but for every debt there is a liability so what we're experiencing now just like in the ninth circuit's is a month of debt on the one side but then not amanda not the others and what is the other mountains a mountain of savings with nowhere to go but they are this way thank god senator that. so there is this a very simple point if you had you know

a hundred billion dollars what would you do with it it is a major headache for those who have money what to do with it in the goodness of productive investments this is what is broken down this is where we have a current crisis worldwide a lot more so in europe because of the problem i think structure of the eurozone that mekin is by which. savings on daybreak to do a t.v. does that help us produce that income that i'd stunt that or extinguishes that that mechanism is broken down this is what the crisis all about ok but you're saying that the all the only hope that europe has left now is politicians to to redistribute capital and to make the decisions i guess have winners and losers but to stay on that you know the example of the united states as you brought it up you know we've seen politicians and central bankers step in after the two thousand and eight crisis to essentially have a lot of authority in doing kind of what you're calling for in the economy and taking a lot of action and what we've seen is that wall street makes out like bandits

because they have direct influence over where the money goes and everyone else a lot of the people you know who are left to sit here and watch this show are you know having to think on their hands and go with that how can we know what can we do . that sometimes this isn't it on the one hand with other politicians stepping into two thousand and eight and saving the banks from closing down we would have gone back to the stone age on the other hand they didn't have to save the shareholders and the bondholders of the banks it would. it would have sufficed to guarantee the divorce it's of the divorce those the reason why they went all the way towards being the province of the bankers was because of the very cozy relationship the politicians have with bankers so look we are between we the elected we are between a rock hard place on the one hand it is inane to argue that during a major financial meltdown the government should not step in the government certainly should stop step in and we have not. and that it's up to the lion or

a british to do it having said that if we allow the politicians to step in the way that they won't in order to maintain and propagate photos of the missions with blankets and then all we lived up with is a kind of regime john called bankrupt ocracy and that is ruled by the bankrupt banks and then you know there's the problem of markets constantly hanging upon whatever a politician says or a central banker says or does what kind of economy is that where everybody is hanging on every rumor that comes out in the financial times of what leaders have done at some secret emergency meeting in brussels to please their political constituents. we live in a bewildered worlds a world that doesn't really understand what is heated back in two thousand and eight because that crisis of two thousand and eight never never died out what it did was it to new day didn't migrated it kept changing shapes and forms but it is still with us they're real problem is that the mechanism which was recycling

surpluses up on people has an eight which unfortunately was wall street has broken down wall street cannot perform their all that it was performing between the late and late ninety's seventy's and early ninety's and two thousand and eight and now we are in a world in which surpluses and their faces cannot communicate with one another so normal life cannot please you everybody seems to be bewildered our politicians are caught up in bed the little gaming exercises in the united states you have a country which is effectively ungovernable as the administration and congress and locked in mortal combat the fed has a single leave it at bay which is trying to keep the ship afloat in europe we have at the buckle which is taking many comic forms which would have been funny had they not been so tragic that a good point you bring up in this allusions to sound really tragic so i mean i don't know if there is a good one but we want to continue this conversation because i actually have

a question for you that i think you are going to have a very colorful reaction to that our viewers will not want to miss so stick around i don't want you to go anywhere you can hold tight for one moment we'll be back with more with the honest verify it. and still ahead what comes first money or debt and you ask what we thought coming about for the break we will respond to some of your comments and questions but first your closing numbers. above. you just put a picture of me when i was like nine years old and don't you tell the truth.

i confess and i am a total get of friends that i love driving hip hop music and for. that he was kind of the guest today. i'm very proud of the role that all she has played. on the flop. 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 that sort of a being made who can you trust no one who is you know view with the global machinery see where we had a state controlled cap. it's called fascism when nobody dares to ask we do our teen question more. so as people read the tealeaves of this summit and what politicians have done and not done we have another idea what about doing nothing what would happen then if there is no good solution author and professor yanis varoufakis i'm stores that have something very colorful to say i want to bring you back into the conversation now you were getting into this a little bit but you also said that hey everyone is the wilderness markets are be

willed politicians are you know the best solution we have even though they are not a good one so what if they did nothing stop trying to do so much and took their hands off the wheels a little bit. well you know there is some of that to support your point if you look at the last year of growth rates in the united the european union and compare go june with from italy with spain with britain did with the united states you'll find that the monks those come to the countries of them mentioned this is a crisis when when it comes to the highest growth rates of a small but level is the highest the when it is built you know we all know that she has a distinct characteristic it is not the government's litany in the past. so you may wonder if there is a point you know one of my theory about this is quite simple. no governments no

bo's a steady. need the seeds so there you there is not stimulus but there's also not stary which we have seen so many damaging side effects that i did not think that was going to be your answer there jaan is verified as i feel very pleased with myself right now but i think back to what you're saying about recycling surpluses and capital moving around how do you get capital move around in a cycle those surpluses without liquidating the debt. in europe you see i'm going to tell you something else that will start. to you know want you to assume that your son's the european union of the euro zone's to g.d.p. ratio is what it is it's less than three percent. less little of the magic he will have gotten italy is. yes much less imagine if we're to go to the white house and say to place the bomb mr president i've just used to three percent of

g.d.p. let's start building highways hospitals do you know. bring on line a few more a power stations operating on green energy now the point i'm making is this that the eurozone as a whole has extremely low debt because the debt is burdening the individual states the member states so clearly what we need to do scenes this dead he structured in a domino like manner and investors do not trust italy to not trust spain and trust course greece ireland portugal soon they're not going to be trusted friends and after that they may not even dress germany obviously what we need to do is we need to do what the united states did at some point in eats development or evolutionary past towards what is the game after the one nine hundred thirty thirty two election and that is to unify a large chunk of the member states that too centralized to bring into the center

and to manage it rationally centrally in a manner that markets last that they would get their money back from the union as a whole and now that you can do without federation the united states had was a federal state and that's why they managed to do it we didn't we're not a veterans they don't we cannot become thinkers that because by the time we go through the levy changes and all those silly parliamentary process is there will be nothing left to figure a way that will be you know will simply be smaller being actions that we can do it on the can do to the base of this release and be good. total. and using the proceeds for which the city is substantially into debt for each use in the country in the amount of gene simmons but challenging the member states to be putting its one vision two member states so you are advocating for what many have been talking about with the euro bond aborts and that is all we have time for

it is really been a pleasure having you on the show today meanwhile it was really it was mine and meanwhile i should mention that other countries we see preparing a contingency plan in case the euro collapses and some reports are saying that a lot of great think the euro is going to collapse but a day is that true just for falls we're out of time but i'm just curious i think the scene of the collapse wow ok that's the final words and powerful ones from me on this for fokus straight from the heart of the crisis really in athens. all right it's time now for word of the day where we break down a financial term or concept for our very smart viewer but just maybe not the financial expert and today given the topic given the importance of the euro zone it is european stability mechanism or e s and then it is big news today for obvious

reasons because of the e.u. summit it was one of the decisions that it affected and according to christine lagarde the head of the i.m.f. it's one of the reasons she is so encouraged by the e.u. summit decisions. three key components number one going to really consent to do if you screwed you know number two they've decided to exit the route . to bid to become the. and according to the headlines it's one of the reasons u.s. markets are excited let's take a look at this bloomberg article headlined u.s. stocks rise on consumer confidence and european debt agreement once again europe always driving the markets up but basically they were furring part of it to the european stability mechanism so what exactly is it it is take a look at the definition it's a permanent rescue funding program was originally designed to succeed the temporary european financial stability facility which is known as the f.s.f. and the european financial stabilization mechanism now the fund is set to come

online in two thousand and twelve so what came out of this meeting leaders is that the fund is supposed to come into effect earlier a year earlier than was planned in july of two thousand and twelve now its lending capacity is five hundred billion euros originally the e.s.m. was scheduled to come online in two thousand and thirteen this is after the f.s.f. which i mentioned was set to expire and the f.s.f. was set up during the original greek debt crisis in two thousand and ten now this is a bailout fund the money comes from euro zone member states and the biggest countries put in the most money now reportedly their requirement to get private bond holders to share the burden of future rescues will be dropped from its treaty that's another thing that came out of the meeting so this is yet another bailout without a systemic approach to the eurozone wide problem and zero hedges take puts it pretty well they said europeans seem to love night clubs much more than americans

maybe that's why they make all these announcements at five am they're used to table service shutting down around that time and having to make a decision of what to do next i can count on my hands how many good decisions i made at four am after an all nighter on one hand why will this be any different and that is the e.s.m. . all right it's friday so it's time for me to respond to some of your feedback and your questions and comments now don't be disappointed folks i'm not responding to hair and make up related ones only this substance related stuff makes the cut so yesterday if you watched the show and if you didn't go watch our you tube channel

we interviewed william black he's a former regulator who oversaw more than ten thousand criminal referrals and a thousand felony convictions during the savings and loan crisis now we talked about of course m.f. global which was led of course by former goldman sachs c.e.o. john corazon and i want to clarify one viewer response that i saw on you tube our viewer said i cannot believe i'm hearing that william black is saying that possibly goldman sachs would get bailed out of course they would do w.t.f. are you talking about they have bailed out lesser banks why this sudden apologist attitude so to set this up i was talking to black about the reach of goldman sachs and he was saying that the most financially exulted firm is composed of people who don't know prudent investment because they haven't done it in decades and i was asking black and maybe it's not that they don't know proven investment but they don't think it matters because their losses will be socialized by the government as we've seen with bailouts in the past now here's what he actually said. actually but

do you really with m.f. global it's kind of small to predict to somehow it was going to get bailed out in the same way. so just to be clear he wasn't talking about goldman sachs he was specifically talking about global that he didn't think they would get bailed out over banking on that because they're a much smaller firm and as a columnist i read on seeking alpha wrote it wasn't the size of m.f. global which was comparatively small which was the shocker it was the fact that retail investors lost money in customer accounts and what i wanted to get out with black actually to have more time is the reports that john corazon was betting on government bailouts of the euro zone countries as an assumption in the trades he was making on european sovereign debt which went so wrong so maybe next time but i just wanted to clear up that our guest was not saying that goldman wouldn't be bailed out he was saying a global was probably too small for them to assume that they would get a bailout now moving on. asks lauren does money come first or debt come first i

really want to hear your point of view on this question well i can't take all the credit because a capital account is a team effort here but we say that the way that the federal reserve notes and where the money supply is by the federal reserve issuing them and return for debt namely u.s. treasuries so in order to print money the fed actually has to buy something and that something is a fixed income asset i.e. debt but you take this one step further what is a federal reserve note you know a dollar well it is itself a liability against the federal reserve itself so in reality and if the money system money is debt. hope that answered your question now with no name marketing he says this i want to debate lauren lyster i got two thousand bucks that says i can beat her i want to see how she can hang with inform texan for ron paul's district well with no name marketing show yourself you have no idea how much i love

being challenged to a duel i challenge you to on a semi a video say what you want to debate me on because it's really one of my favorite things in the world to do moving on this comment comes due to overwhelmingly positive reception that it got from our team here at capital account the weasel says capital account is your best show aarti give them all a raise well. we just had to get that in thank you the wiz all for making all of our days maybe you know again that out there and yesterday during the part of our show where we hash out kind of the lighter stories we had a story about people wanting u.f.o. info petitioning the government for it and shannon added a little something that was a total hit c.-k. dolls says that the tinfoil helmet was definitely a nice touch to a serious show keep up the great work now if you missed it here's a snippet. i think the white house should definitely respond oh my hats fly off but i do only because a shooter is god it was great now blank never responded and said she has protection

from the aliens but does she have protection from the bed and the answer is no blank ever she most certainly does not and i will leave you with that if that's all we had time for happy friday thanks so much for tuning in and have a great weekend from everyone here capital account. culture is that so much different and there's a huge musician on the mark with the old organization finding a new mission this is how the arab league is being described by some particularly when it comes to syria others are not so appreciative. you know sometimes you see a story and it seems so for like you think you understand it and then you glimpse something else and you hear or see some other part of it and realize that everything you thought you knew you don't know i'm target market is a big picture.