good afternoon and welcome to capital account i'm lauren lyster here in washington d.c. and here are your headlines for march eighth two thousand and twelve well today with another d.-day a very very seriously how many days can you have when you supposedly already won the war meanwhile president of the eby mario drawing he is defending the e.c.b. trash to cast liquidity operation today the l.t.r. oh. the protea rule. i would say an unquestionable success. really probably because your core colleagues at the e.c.b. is out saying to eat the balance sheet is gigantic and the quality is alarming will

decode more of this euro zone news and the gold rush continues at least the rush to account for all the gold we told you german lawmakers are auditing the central banks gold now reportedly members of parliament in switzerland want this with people to be able to vote to keep the country's gold physically in that country and for bid the central bank to sell any more of its reserves why. does it come down to that is gold the nuclear option in a currency wars well that's got it and speaking of china and the rest of the brics what alternatives to the u.s. dollar besides big euro for obvious reasons to use their trade and investment aiming to move that along and internationalize its currency china reportedly is planning to extend the loans to other brics nations other countries in the bloc are planning to do the same with loans in their respective currencies we'll talk about

what this all means let's get to today's capital account. so the greek debt swap deadline was today just about an hour and a half ago now purport preliminary reports greece clear the minimum threshold to get this deal done i've seen anywhere from seventy five percent to ninety four five percent of private creditors signed on according to reports so far now this is yet another case though of the solution isn't really a solution yeah forgive the debt in order to take on more debt to deal with a problem that is too much debt nonetheless these are the policies they continue to be deemed solutions by leaders and speaking of super mario better known as mario

draghi president of the e.c.b. was defending another one of them today in a press conference saying that the e.c.b. infusion of more than a trillion euros of cash into european banks was a success this is of course the longer term refinancing operation or. now this is europe quantitative easing but remember this isn't money printing because they are loans in exchange for really questionable collateral so just remember that meanwhile a few european countries that we know of at least look like they're trying to prepare for the worst battening down the hatches on their central banks gold and china and the rest of the brics bloc of developing nations brazil russia india and south africa making up the rest appear to be making their contingency plans to to get away from the u.s. dollar and the alternative of the euro with all of its problems according to the financial times they're planning to issue loans to each other in their own

respective currencies this is to boost trade between these countries and promote the use of the renminbi versus the dollar when they do so to here so here to talk about what all of this means is edward harrison he's founder of credit write downs and he is here to sort it all out edward it's nice to see you again all right so of course what else will we be talking about other than europe we only got to start with. so grief is d.-day today has the day today there is always a d.-day when it comes to grief every time there is a deadline the decision is branded as d.-day this is another one it looks like it may be clear the hurdles that they need to we are always going to have another deadline in greece there will be more to come so when is there really going to be a d.-day well the video will be will leave the euro zone that will be called summit solution here because the end of the day greece is uncompetitive in a strong currency union with germany the political will for the transfers that

needs a longer period just aren't there if you look at germany itself you know you had west germany and eastern when they came to go you look at this. of twenty years before you got any semblance of normalcy in terms of unemployment and so forth east germany is doing ok that's the sort of thing that you would have to see in greece in order to bring their competitiveness up to the level necessary to not have these recurrent growth we are you saying that that the fiscal compact in all of these solutions are going to work exactly how i imagine that so days when greece leaves the euro zone when you think that's going to happen i know you're not because of all. the good question is i think that the germans in particular are preparing for that eventuality right now the real question is when do the that the situation in place. are stable enough so that they can actually go ahead. make some compromises and responsible wow ok well until then let's talk about some of the

solutions that they do appear to be doing to buy time and kick the can down the road mario draghi president b.c.b. was talking today in a press conference defending l.t.r. o. the longer term refinancing operation they've done two rounds of it three year loans one percent interest rate in exchange for what a lot of critics have said is pretty shoddy standards of collateral but i want to play what mario draghi said to defend l.t.r. as a success today let's hear a little bit of what he had to say. basically the earlier all had a powerful. a powerful effect of removing what's called the reese from the environment now i think the ball is in the go in minutes and it the other octave specially bang score. let's decode this because that is technocrat talk is cheap basically saying else hero allowed us to kick the can

down the road queue by three years in order for governments and banks to try to get us together. is that you know if we didn't get in the. money off of the dodgy collateral that were bad things with. the so-called till you know spiral down and we know that it's not going to happen and so we put a lot. of the whole thing. on you banks and governments to get it sorted and to say a trillion euros seems like a lot of money to buy that kind of time when it when the eventualities don't seem like they're actually going to work out the way they're planning for them to well you know they're in a political economic problem the difficulty is the solution that they have which is austerity really isn't going to work basically it's creating a deflationary spiral in the periphery and it's actually crept into the core an interesting point is that the dutch for instance they are not going to make the

earth with three percent hurdle from austria in two thousand and twelve so they have to as well this is one of the countries that is actually supposed to be one of the better countries that is supposed to be doing well and if they're cutting you know you have austrian france also cutting in the same way because they're going to miss there are rules of three percent then you have you know a very negative scenario so the problem's been much further than just the peripheral countries that you know are the ones that are in the desert crises right now speaking of problems someone that did not mince his words said that the e.c.b. is dealing with quite a few of them end of mario doggie's former colleague at the e.c.b. former executive board member you're going stark said in an interview with the newspaper today the euro system is balance he is not only gigantic in his dimension but also. army in its quality so he wasn't quite buying what super mario was saying in that press conference today he said no way the balance sheet is gigantic and the

quality of it is alarming now of course we've heard kind of these reports that the collateral accepted for l t r o o was kind of questionable what they would accept but maybe you could help us kind of get some detail into what exactly is so scary it's now an e.c.v. balance sheet or what about that quality is so alarming you know lesser quality paper we're talking you know investment with maybe even investment grade i think the way to look at it is it's almost identical to what happened in two thousand and eight two thousand with the fed when the fed was running these quantitative easing and all these other alphabet soup programs they were taking on dodgy collateral they were lending it out. you know very low rates so dodgy collateral for low rates as opposed to good. punitive wits i mean as you have a crisis supposedly that's what you're supposed to do that's the bad is good a penalty would but instead of something different and the e.c.b.

is taking a page out of their playbook it's exactly the same thing ok but riddle me this because bad collateral at a really good rate for the federal reserve it's a problem it's still the global reserve currency the u.s. dollar that they're working with in the euro zone the euro if not does that mean that this could be more of this asterisk for them i don't think so i don't think the that the dollars the global reserve currency is makes a big difference and you have to remember that the euro is one of the largest holders of reserve currencies in the world as well so really the real problem is that the e.c.b. has jumped its balance sheet if anything happens that you know in terms of that scale risk. that mario draghi was talking about in the e.c.b. is therefore on the hook. for the they have to turn to senior roots which is basically money printing in order to make sure that their capital. is there so they

would just do this and think that bail itself out by printing money exactly yeah ok well speaking of that i want to talk about the money that is now returning back to the euro zone one of the other things i thought was really interesting that super mario set is that l.t. arrow his restored faith again in the euro and that they've seen money market funds return and i thought this was interesting because didn't money market funds go there in the first place because the federal reserve has been keeping interest rates at zero so they can't make any money here so they have to go pers pursue higher returns somewhere more dangerous like europe right look i've been saying this for two or three months ago four months back in november i said you know when the whole thing was blowing up i said if the e.c.b. gets in the backstops italian and spanish debt and somebody gives it a bad start people going to go in there because your risk is the people are getting cross they're not getting the yield that they need and therefore they're going to

go out and you know the risk go into spanish and italian debt and so you know drug use organize the cells yarrow thing when we really know that it's all about the saga it's not just about the bags you know in order to facilitate this market as a sort of spirit of italian and therefore they have already bought yeah but so ok so but to back up a little bit so money market funds once europe got really risky they evidently left and ran away because they. knew it was going on to their read the same newspapers as we all were but evidently now they are returning ironically because of the actions of the central bank to prop things up there so my question here is what is driving investment these days capitalism or follow the central bank row where the global risk would turn is really would follow at the end of the day you know you have financial repression where the central bank is key. it's at an artificially low level and if you're a pension fund and you have. things that you have to pay out in the you said to

yourself we're going to get tax return and you're only getting x. minus two or three percent we're going to do this then you're a big a hole no you have to go and seek higher return that means greater risk and this is what pension funds are doing this is what investors in general are doing and that's why easy money is actually not a good yeah and it's why i think it's ironic that you see the central bank decisions play such a role on both sides in financial repression and where they are you know propping up markets in a way that there is more benefit to be had as far as the u.s. you can get there i want to ask about germany and switzerland is there are a few reports that have come out from both of them and germany lawmakers are out again according to central bank in switzerland four members of parliament want this with people to be able to vote to keep so it's a lens called physically in switzerland not allow them to sell any more of their reserves and keep twenty percent of their reserves and gold i'm wondering what countries are doing when they're doing this are they concerned about

a euro zone collapse and they want gold to back their currency in that situation or are they worried of a monetary crisis where countries could use the nuclear option and actually take their gold because a lot of them keep their gold outside of of their country a lot in the new york fed for example. i think they are battening down the hatches as you were saying it's not a silly that the actors themselves that is the social think about things and therefore we need to have physical possession it's rather that you know the political volatile that there are people who say look we think that this is a dangerous situation we don't care what happens we want to make sure that we are we have our good in our country and therefore we're going to push the political will to make sure that you the central banks are doing exactly that and so this is been going on for at least two or three years there have been a lot of reports. specially in germany about the germans not having visible.

the eurozone breaks are. should be visibly the situation of people who think that they are. great examples that i don't think although we don't have time to get to china but i do think it's interesting that china is going to is planning to issue loans in renminbi and other brics nations are planning to do the same so that they can trade in their own currencies circumventing the dollar again we know that the brics are not like the dollar and don't see the euro as a good replacement for it either we can't get to the impact of that today but we'll have you back on to talk about it because it's interesting i appreciate talking to you though as always your insight is very insightful that was edward harrison he is founder of credit right down on. and to lead we talk about zombie banks and banks ders but the question remains are we headed for a zombie apocalypse we'll give you our three cents on how one university is preparing for the death battle but first the closing market numbers.

we just put a picture of me when i was like nine years old i like to tell the truth. i confess and i am a total get over friends that i love driving that is a lie and hurt. but it was kind of the just today. i'm very proud of the world without you it's place. you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else here's you some other part of it and realize that everything is ok if you

don't i'm sorry welcome to the big picture. what drives the world the fear mongering used by politicians who makes decisions to break through. who can you trust no one who is you know view with the global machinery see where we had a state controlled capitalism is called sessions when nobody dares to ask we do our t. question more.

all right it's time now for word the day where we break down a financial term or concept our very smart viewer but just maybe not a financial expert and today it is debt swap because it is a very important day for one in the never ending euro zone solution saw that just look. greece's debt deadline private investors have just hours left to decide whether or not to walk the walk on hear the other details about the greek debt swap that you need to know. what you need to know about the greek debt swap deal is what exactly is a death swap in the first place let's take a look at the definition a death involves the exchange of a new bond issue for similar outstanding debt or vice versa now in the case of greece they are replacing existing bonds with a package of new ones with less than half of the nominal value looking at it a different way at net present value and best years are being asked to give up almost three quarters of the value of their holdings now this is all to cut greece's public debt to around one hundred sixty percent of g.d.p.

of the two hundred six billion euros of greek debt it will relieve one hundred five billion euros of them now the benefit for investors is they don't lose all of their money they use a court lose a portion of it the necessity for greece is that they promise to get this debt swap done to reduce the country's debt so they could meet the terms agreed it home with the e.u. and i.m.f. to get more debt more loans in the form of the next one hundred thirty billion euro bailout so that the government doesn't default on you guessed it its remaining debt now the telling with today it was at three o'clock so the numbers are rolling in we don't know exactly how it went we won't until one am our time a.t.m. in greece but the reports we're seeing so far is that ninety five percent of private creditors have signed on some reports put that number a little bit more modestly and again as i said we don't know exactly now this is a technical it technically this is a voluntary deal but here's the hitch according to reports of greece gets two

thirds of bondholders to partake which it looks like it did according to government according to government officials they put that number about seventy five percent if they get that two thirds of private creditors to sign on athens can impose collective action clauses which basically just means greece can make all of its bondholders who own greek debt written under greek law except the deal by force now that reportedly trigger credit default swaps. in that situation let's take a look at who reportedly is most exposed to greek sovereign debt here you have it french german and british banks those three zero expected to be hit the most c.d.s. exposure just to remind you we don't know exactly no one knows that complete picture now what you really need to know about this deal bigger picture is that this is just another example of more financial engineering more debt more refinancing that in the end does not address the issue which is that greece is

insolvent and leaders are just trying to find new ways to pour debt down its throat as the medicine to cure the disease that is crippling debt that's that's what. just. all right let's end this up with some loose change we've got to meet three and shannon to weigh in let's listen to jim grant he is the founder of grant's interest rate observer he's been a guest on this show he is who ron paul said that he would pick to to be one of his economic policy leaders and i hate that ron paul is and i could term that chairman if there would be a fad because ron paul has and all you have is that you can just you know do it it's not like jumping talkers that's right and but he was in an interview with

maria bartiromo and there was a very interesting part that caught our eye we want to play it for you and then we'll get your take one of the alternatives jim you've been you've been making the case for gold medal is the one that is it all turned up so we have the right are we recommend the right. to we all do but what about an older adult. ok. so the question that came up for us is he just advocating capitalism and said as he typically does or with the advocating for capitalism and implying that c m b c is not in the tree. obviously. i mean you think that i think i think that that's a little far fetched i wonder. we have our maria bartiromo there going where he just feels very strongly about capitalism and was making the point that a lot of people don't you know a lot of policy who doesn't post here with me i don't hammer people to benefit but i wasn't sure that he wasn't hurt she said we believe in capital because no it's

not true and so the point is that people you know we all is and. she made herself to him you know what was really saying was like with some real i like you coming. i'm going to go they can be that i know that you're an apologist for blacks that's why you work at c.b.c. because c.b.c. is actually there so that it can support that too big to fail but that's its job ok let's be honest it's what the shareholders of of i mean who had money with that are going to see in d.c. was of i remember when they disclose that information ok so they are invest in the banks the cars are going to break all right fair enough. i. you what i. got to against john i know we're just going to have to have jim grant on again so he can answer that question for us let's move on for now is this spring michigan state university is offering of course and how to survive one of the.

the two credit online course is literally titled surviving the coming cummings zombie apocalypse catastrophes and human behavior and the course begins and ends with a catastrophic event simulation worst interest signed into survivor groups and it goes from there is this a sign of sentiment we've talked about the headline educator and all these different things and i mean the fact that they're actually actually horses and surviving a zombie apocalypse seems to me that what's weighing much more heavily on people in this country is a very dark reality versus consumer sentiment numbers that came out positively whatever i mean i think i think goes even more deeply than i think all the all the zombie movies that you see more of it's becoming popular over the last few years is a metaphor for what people feel like in their do lives they're zombies they're consumer zombies they're credit zombies are trying to survive the zombie attack if

they themselves are is because the people that are left are like i don't want become a zombie like every other. sucker out there i want to survive the apocalypse i want to get out of this thing and make sense this is in michigan to worry didn't we say this is in michigan where i mean been extremely hard to see but if you're going to already seen the economy it's like what's a call it's like the will the will move or we will smith like i am legend these guys are like alone in this giant zombie world they want to survive. and in euro land and we can bring you in here i just want to point this out because we talk about zombie banks we talk about zombie democracy where they put in technocrats and right here you have your money. merkel you know you've got to protect yourself against zombies so whether it's consumers or you know leaders i just i just hope people are going to. i mean students are going to take it seriously i feel like me and my university there is a class called clinic for credit there is also one called rocks for jocks there are

real docs were there real time and also the courses but you know they were courses online courses that people talk you know just to get the credit so i'm hoping that people take it seriously as for what it's for care what is the roots for me i don't mean it just means it's an easy class dimitri and rocks for georgia and yeah i'm sure really gotta let them down geology class it's easy that i was dumb as a rock ok but i shan't and i'm i'm sorry i'm kind of with you i think i'd zombie class is going to fall into that category that you're alluding to speaking of zombies a story came out saying that starbucks and now it is banning all screenwriters from its locations worldwide effective immediately because they had a study commission and that found that screenwriters spent the least amount of money and also had the highest incidence of stealing sweet and low packets it was a fake story it took us five minutes to figure that out but it's funny that it's a story because i mean maybe this would be a wise business decision for starbucks we all know how to google boy are there all

day long i can be good for business especially especially on the west coast because you're the hollywood the more those people you have is what i look you know about only when i'm sorry but i can compare a very objectively l.a. star just listen to me if you're going to all over the country and i would choose those. are a lot of the others are new york they're just really got aspiring screenwriters and i curse at the starbucks right if your peers who are a starbucks best lessons are those people are aspiring screenwriters but i really screw rows of people writing a script i'm writing a script you know who are going to turn to movies i have an idea oh ok everything's like it is in movies for you to morrow and suddenly you can't we're not on this story because of a conflict of interests and i'm going to come in on the story and i was actually going to say it to starbucks right down the street from here should probably start fanning you tube because. there's. multiple multiple copies that's true but we're paying customers and we don't part and we need all their ways to take it with the coffee leak yet we need to figure out where the best case scenario is for cash cows

yeah that's all we have time for thanks so much for tuning in don't forget to follow me on twitter at lauren lester and get us back on the show you tube dot com slash capital account and from everyone here at cowboy account thank you so much for watching and how to get back. to your show on t.l.c. keisha join phone called talk from the. child's life on the. video on demand on she's my old costs are as is featured now in the palm of your. machine on the key george cong.