closure is that so much of the future because he's right on it so here is the republican party going along best march to november is very likely former massachusetts governor mitt romney will eventually capture the. top stories now this hour from the world wide web to a nationwide war extremist opposition groups in syria turn to the internet to encourage a bloody battle in the country while the u.n. arab envoy seeks of diplomatic solution. emergency call for an overhaul of the electoral system ahead of this year's presidential poll from report the millions of deceased and inevitable voters. and the french credit rating agency downgrades greece to restrict a default shattering the boom the optimism of e.u.

leaders following the deal pushed through by athens. and staying with greece we get more now to snow on the financial feet of the descriptive country as capital account coming up next from washington. 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 was another d.-day of her very seriously how many d.-day can you have when you supposedly already won the war meanwhile president of the eat the mario draghi is defending the e.c.v. trash to cash liquidity operation today the l.t.r. oh. the rules. i would say are an unquestionable so it's. really funny because your former colleague at the e.c.b. is out saying 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 hold now reportedly members of parliament in switzerland like this with people to be able to vote to keep the country's gold business really in the country and for a bit the central bank to sell any more of its reserves why. does it come down to that is gold the nuclear option and the currency wars we'll discuss that 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 for 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 blog are planning to do the same with loans and 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 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 else row now this is your of quantitative easing but remember this is the 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 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 greece is d.-day today it has d.-day today there is always a d.-day when it comes to greece every time there is a deadline the decision is branded as d.-day this is another one it looks like it you know maybe 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.d. well the the there will be the euro zone that will be the ultimate solution here because the end of the day greece is uncompetitive in a strong currency union with germany the political will for the fiscal transfers

that need to be over a longer period just aren't there if you look at germany itself you know you had west germany used to they came together you look at this transfer 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 the competitiveness up to the level necessary to encourage growth so we are are you saying the fiscal compact in all of these solutions are going to work exactly i thought wow imagine that thirty days when greece leaves the euro zone where you think that's going to happen i know you know because of all. the good question is i think that the germans in particular are prepared for that eventuality right now the real question is when do the that the situation in place . so that they can actually go ahead and make some compromises and see if greece want to lose our 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 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 ok let's hear a little bit of what he had to say. basically the earth your all had a powerful. a powerful effect of removing worlds called tail risk from the environment now i think the whole easy in the garden mince in the other aka especially banks court. let's take code this because that is technocrat talk is he basically saying l.t.r.

allowed us to kick the can down the road by three years in order for governments and banks to try to get us together using 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 tail risk it could spiral down and we know that it's not going to happen and so we have put it on there the whole thing. you banks and governments to get it sorted to say a trillion euro seems like a lot of money to buy that kind of time when it when the eventuality is don't seem like they're actually going to work out the way they're planning for them to well you know there is a political. 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 and interesting point is that the dutch for instance they are not going to make the

hurdle 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 friends also cutting in the same way because they're going to miss there are rules of three for say when you have you know a very negative city so the problems stand 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 city is dealing with quite a few of them and this is 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 systems balance sheet is not only gigantic in its dimension but also a lot. 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 all t r 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 easy balance sheet or what about that quality is so alarming you know lesser quality paper we're talking you know invested with maybe even our investment i think the way to look at it is it's almost identical to what happened in two thousand and eight two thousand and i with that said 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 routes i mean if you are going to have a crisis supposedly if that's what you're supposed to do that's the bad is good collateral at a penalty rate but instead to something different the e.c.b.

is taking a page out of their playbook it's exactly the same 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 and the euro zone the euro is not does that mean that this could be more disastrous for them i don't think so i don't think the fact that the dollar's the global reserve currency is makes a big difference 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 tail 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 ridge which is basically money printing in order to make sure that their capital. is there so they

would just get it in thing but 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 eurozone one of the other things i thought was really interesting that super mario said is that l.t.r. o. his restored faith again in the euro and a p.c. in 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 pursue higher returns somewhere more dangerous like europe right wrote look i've been saying this for two or three months now for months back in november i said you know the whole italian thing was going on if he gets in the. italian debt and spanish debt and somebody gives it a bad start people going to go in there because your risk is you can return 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 and go into spanish and italian and so you know drug use organize the sell to our oath when we really know that it's all about the saga it's not just about the bags in order to facilitate this monetization of spares and italian debt and therefore you know they have already bought yeah but so ok so but to back up a little bit so money market funds once europe are 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 fall of the central bank grow the gold risk seeking return is really was followed at the end of the day you know you have financial repression where the central bank is. it's an artificially low level and if you're a pension fund and you have you know things that you have to pay out in the you

said to yourself we're going to get x. return and you're only getting x. minus two or three percent we're going to do that then you're in a big 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 too 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 of a benefit to be had as far as the you know 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 the poor in the central bank and switzerland programmers of parliament want this with people to be able to vote to keep so it's a month old physically in switzerland not allow them to sell any more of their reserves and keep twenty percent 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 about monetary crisis where countries could use the nuclear option and actually take their gold because a lot of them keep their gold outside of their country a lot in the new york bad for example well you know i think they are betting down the hatches as you were saying it's not a silly that the actors themselves as the central banks think about things and therefore we need to have physical possession it's rather that the political environment is so 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 goal in our country and therefore we're going to push the political will to make sure that you the the central banks are doing exactly that and so this is been going on for at least two or three years there's been a lot of reports. especially in germany about the germans not having physical possession of their gold. meaning that when the eurozone. they should be

not as good a situation as people who think they are so what we need to break that was pretty clear i don't think so 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 and their own currencies circumventing the dollar again we know that the brics have not liked 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 had read harrison he is founder of credit write downs dot com. and still ahead we've talked about zombie banks and bank stirs but the question remains are we headed for a zombie apocalypse we'll give you our three cents on how one diversity is preparing for just now but first the closing market number of.

issues that so much of. which of course. is the republican party going along just march to november is very likely former massachusetts governor mitt romney will eventually capture the. the best . 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 it is the debt swap because it is

a very important day for one in the never ending euro zone solution saga just look . greece's debt deadline private investors have just hours left to decide whether or not walker won here the other details about the greek debt swap they each you know. what you need to know about the greek debt swap deal is what exactly is it gets why in the first place let's take a look at the definition a debt swap involves the exchange of a new bond issue first similar outstanding debt or vice versa 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 in a different way at net present value and best friends 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. 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 port 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 of 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 its remaining debt now the deadline with today it was at three o'clock so the numbers are rolling in and we don't know exactly how it went we won't until one am our time a.t.m. and 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 a collective action clauses which basically just means greece can make all of its gone holders who own greek debt written under greek law except the deal by force now that would reportedly trigger credit default swaps. in that situation let's take a look at who reportedly is most exposed to greek soccer and yet here you have a french german and british banks those three zero expected to be hit the most c.d.f. 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 war debt more refinancing but in the end does not address the core 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.

all right let's end this up with some loose change we've got to me terry 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 a ron paul said if you would pick to be one of his economic policy leaders and he's that ron paul if you're like the interim chairman if there would be a fad because ron paul does of all you have. to be good if you look at his head over the word not like jeffrey tucker's that's right 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 on what is the alternative to move it you can make

a case of cold one there is an alternative but we have the right are we recommended right now i am so we're all here but what i'm going to do. ok. so the question that came up for us is he just advocating capitalism and as he typically does or with the advocating for capitalism and implying that c m b c does not need three. obviously. do you think i think i think that that's a little out of the. hammer maria bartiromo there 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 pull it wasn't going to hammer away but people did benefit from it when i was trying to he wasn't she said we believe in capital because no it's not true and so the point is that you know we all isn't really an issue but herself too and you know what was really saying is like with some real i

like you cannot cut. me that i know that you're an apologist for banks that's why you work at c b c because we see it's actually there so that it can support the too big to fail banks that's its job ok let's be honest if you were one of the shareholders and of course i mean who had money with them of course cheryl government would seem to see was a lot of members who may disclose that information so they are invested in the banks the covers are going to break all right fair enough shannon. you what i. got to against john i know we're just going to have to have jim brann 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 were students are assigned into survivor groups and it goes from there is this a sign of sentiment we've talked about the headline and to cater and all these different things and i mean the fact that they're actually actually forces and surviving a zombie apocalypse seems to me that's 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 farming i think i think was even more deeply than i think all the all these zombie movies that you see more of it's become extremely popular over the past few years is a metaphor for what people feel like when they're doing lives they're zombies they're consumer zombies they're credit zombies are they be trying to survive the zombie attack if they themselves or is it because the people that are left are like i don't want become a zombie like every other freakin 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 where i didn't we said this is in michigan where i mean extremely hard headed to play the business even if you're going to go horizontal you seen the economy and it's like what's a call it's like the world the will move away with will smith i got i am legend these guys are like alone in this giant zombie world they want to put. an end in euro land and shannon 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. got your 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 i mean i university there is a class called clap for credit there's also one called rocks for jocks. there are real dogs were the real titles of the courses but you know they were easy courses

online courses that people talk you know just to get the credit so i'm hoping that people take it seriously as. the rocks for jocks mean i don't mean it just means it's an easy class dimitri and rocks for georgia and you get i'm sure really got to look at the down geology class it's easy that i dumb as a rock. but i shan't and i'm i'm sorry i'm kind of with you i think i. fall into that category that you're alluding to speaking of zombies a story came out saying that starbucks and downstate 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 people boy are there all day long i can't be good for business especially especially on the west coast because you get to hollywood the more those people you have these are those you know about

only when or you can say i'm sorry that i can compare a very objectively l.a. star just listen to me and your guns 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 care is that the starbucks right or a starbucks press let's go to those people are aspiring writers and really screw people writing a script are writing a script who are your true parents who is i have an idea oh ok because everything's like it is in movies for you and you can't we're not on this story because of a conflict of interest come and i'm going to come in on this story and i'm actually going to say it the starbucks on the street from here should probably start banning you tube because. there's. multiple multiple copies of those who were paying customers and we don't part and we go there we start it we just make the coffee we yeah we take it to go where the best case scenario for character oh yeah that's all we have time for thanks so much for tuning in don't forget to follow me on twitter

at lauren lyster and give us feedback on the show you tube dot com slash capital account and everyone here at capital count thank you so much for watching and have a good night.