good afternoon and welcome to capital account i'm lauren lyster here in washington d.c. these are your headlines for march twenty seventh two thousand and twelve ben bernanke he is on class number three of his p.r. offensive today defending the fed's response to the financial crisis like the federal takeover of fannie mae and freddie mac. . protected those are basters that had to be done or else it would be. your misinterpretation of the crisis meanwhile timothy geithner pushed for more money funneling through multilateral institutions that fund bailouts found other agenda items. these institutions of course are part of our broad american

strategy to protect our national security interests. now if you're just sick of listening to all of the us it is all over our social and national problems good because today will focus on how to save yourselves and the economic alliance of brics nations brazil russia india china south africa they're holding their summit this week on top of proposals for a development bank also ways to trade and lend in each other's currencies now we'll talk to investor chris mayer who is out with a new book where he argues the narrowing of the gap between the emerging markets and developed economies will be the most important long term investment bean of the twenty first century will give us details meanwhile the former i.m.f. president is charged with aggravated pimping while the united states world bank nominee is under fire for not wanting to camp out the developing world will discuss let's get to today's capital account.

ok today we thought we should take a break from our usual fare of fraud corruption and too big to fail mob like domination to talk about some opportunities because as we've discussed on this show regularly we know in the u.s. we can't save that interest rates are repressive and are just crushing savers who are losing money home values continue to decline prices fell for the fifth month in a row in january to the lowest level since early two thousand and three you can see in there we got those numbers today from s. and p's case shiller index and i was talking to a very smart source and we were discussing ok you know if the bad guys have won and there's nothing we can do about it we can keep fighting it we can fight for the

right thing but they're winning how do we protect ourselves what do we do well we know the economic trends ok the growth of emerging markets now represent close to fifty percent of global economic outlook you can see right there the red or pink are emerging markets in the blue are the developed economies and we talk about that on this show often in more macro economic and political terms what that should mean for the world bank leadership for example or what it means for the dollar as the reserve currency but our guess these this is that the narrowing of the gaps between the western world and everyone else will continue for decades and this will be the most important long term investment theme of the twenty first century now he has traveled the world getting all of the intel and doing all the due diligence for us that supports us these as these put them all into his new book i have it right here it's the world right side up investing across six nations the author chris mayer joins us now thank you we are so excited to pick your brain about this i was saying

before we started that you're probably everyone's top invite for their dinner parties or whatever to take all this knowledge out of you let's just start with kind of the thesis of the book before we get to investing because you point out where is the u.s. used to be dominant in terms of global production. that gap between the u.s. and everybody else has really been narrowing and the what they're trying to like because when you're century and and aside from the end that's meant you call this the world right side up and you don't think it's a bad thing you don't think it you think it's a good thing you think this is how it ought to be why is that. process of taking over taking place over a long period of time and probably some time in the one nine hundred fifty s. which remarkable to think that in the one nine hundred fifty u.s. alone represented half of the world's manufacturing output and the us western europe ninety percent of the world's manufacturing output so we've come a long way since then and that is really an anomaly when you look at a longer period of time human history china and india were large economies and

there was much more of an equality between them so i think that the world we're moving moving towards creates a lot of exciting investment opportunities because i heard you point out in the beginning all the problems we're having a lot of those problems in emerging markets they don't have they have a younger population they don't have the issues we do and there's a lot of work to be done but let's talk about some of them ok let's talk about first of all some of the other changes besides g.d.p. because when you point to is look at it you said it used to be that the amount of shares traded an i.b.m. on one day in new york were more than all the shares trade traded on a day in shanghai or bombay so how does that change and why is that an important indicator. well i think it's an indicator that. emerging market companies have done a lot bigger used to be even though they're only maybe ten companies that had a billion dollars in sales and now there's something like more so you have a vested menus just gone up tremendously you can reasonably buy. brazilian

companies on the new york stock exchange you can buy russian oil you can buy companies in great in china so that reflects what's taking place on the ground you have more people with more money in their pocket they're. driving cars every emerging market i go to. cars instead of bicycles they're living in homes in the city instead of farms they're eating meat vegetables instead of cereals and grains and so all of those ideas point investment trends from auto parts suppliers to farmland. and i want to get into farmland in a little bit because that's something we hear a lot about first i want to look at kind of how we got here and kind of some of the trends between looking at the developed world against the developing world you point out your colleague and editor at the daily reckoning eric sprott i when he was giving the example that at one point c.d.s. on triple a rated french debt was higher than that of chile which was rated below that and not only that but higher then brazil. debt that was all one notch

above junk and then if you look at you have this in your book to the how the latin american stock exchange has performed some of the stock markets in latin america versus some western european stock markets so what is the market telling us and all these trends market is telling us that these countries have something that we are one of these countries that are resource rich so they've been right in the commodity boom and again i can't emphasize things like population being young and they don't have a lot of the debt problems we do in these countries and governments are also moving more towards open markets making it easier to for foreigners to invest and so those things are starting to pay off now that's one question you touched on debt is that really at the end of the day what a trend like this that we're seeing is all about the western world is totally indebted now and developing countries have kind of gone through their crises they've had the shock therapy or the i.m.f. loans or whatever and they've paid them and they've learned now they don't have

high debt loads and they have savings and that's a foreign reserves is that part of this think that's part of it and you know again we see that when it comes to consumers in emerging markets they're spending a lot more of their income on things like food they're spending more on just basic things getting this war for. so they're in a position where their growth curve is going like this they're going to be spending a lot more money going forward u.s. consumers more and retrenching mode trying to save more money and pay down debt it's you know it's interesting i've been i haven't done nearly as much traveling as you but when i did report in brazil and vallas they have dishwashers microwaves so they have appliances even though they have literally just gotten running water but that's beside the point you were talking about farmland let's talk about back into something that we often hear i want to bring up another chart from your book this shows how western canadian farmland performed during the

seventies versus the s. and p. and money market fund how the seventy's were a period of high inflation and there are concerns among a certain camp of people that that's something that the united states could be facing and that we're headed for and it's high inflation do you think that arable land is a place first and foremost on the debasement of paper money i think it's a combination of both things it's hard to talk about formally through generally because in some parts of the world farming is expensive in some parts of the u.s. farm where i don't think it's a particularly good investment right now for western county coroner is for the provinces around it and she compared to the u.s. and that's two fold like you say some of it is it's going to be because she's going to be formally known as a real tangible asset or hold its value and part of it is because we have this global shift and many millions of more people joining the middle class and spending more of their income on things like meat and fruits and vegetables which are much more green intensive and so we see

a lot of demand. but we're running out of it because i want to bring up another chart that shows how the supply has declined per person of arable land over the years over the decades really how much of this is supply versus demand which is only balances that's another good point the man is. we've done a lot more with an acre of farmland now than we could do forty years ago but you look at some of those gains are starting to are starting to slow and so as we continue to spend cities we have certification we have water pollution problems to deal with and so valuable farmland is definitely or i should say pristine farmland a valuable commodity in a lot of these emerging markets where you can get away from about emerging markets want to play because catch one sort of is because it has only been open to foreign investment i would say certainly within the last decade or so that was sort of closed off into the market ok. definitely firmly in places like columbia when i mention in the book there's

a good market that market is virtually kept in farmland a lot of. land there that because of the drug lords or there was. a lot to me to bring that acreage on line and then you talk about i guess kind of the flip side of this which is that with emerging markets growing in their consumption for me and other things that require grain growing the natural selection do we need to worry about food shortages not just in the developing world but in the developed world i think is developing world we don't we don't have to worry about food shortages because we're the ones we have money that will hurt found that it will hurt is that nobody that will hurt the people who are living a little more week to week but i think there's a lot of interesting innovations going on with farmland so there are these again come back to some of the investment trends there's. irrigation a new way new seeds in fertilizers and things we can use so i don't think we'll have

a problem producing ultimately but it's going to take time and take investment to get there and when we when we do have disruptions. then we could have serious situations in emerging markets i mean some ways this would help if the arab spring . certainly doesn't have a lot of people excited yeah what about property rights because you're talking about farmland in places. like colombia and such a one canada. how much does this play a role in people's decision for own land and invest in places because even you've seen in the developed world in the west m.f. global has shown that your money is not necessarily safe and that's a big issue abroad i know i was in brazil was pro forma in project there and basically when the brazilian government came out and started putting restrictions on foreign investors. that's an example where you have a lot of land and big opportunity there but because of property rights question difficult eventually getting the land it's not so easy that sort of throws in a lot of land in many different markets so that certainly that's

a big big issue when you're talking about farmers probably right ok what about just in your travels overall when you've gone to i mean you mentioned nicaragua in your book you mentioned to dubai which i want to get into a little bit later after we get back from break you know all these different places where you see the best opportunities for somebody that lost their money base they want to know that they can invest and they can retire with their family and they don't have to worry about m.f. global or their farming confiscated or whatever what do you see is kind of those golden opportunity well that's difficult there's a lot there are a lot of different markets but one thing that you learn when you start to dig into these markets is that there are surprises so nicaragua for example is a country that is actually pretty favorable for investors and there are there is a development that publishes a part of program show santana for example that's in the pacific coast highway is really clean there and it's a beautiful beautiful place your property rights are very secure there so that's something that i think most people would not appreciate just in general but it

turns out it's a really good place to retire and put some money there wow so new nicaragua there you go we're going to go to break but when we come back i want to talk to you more about some of these other places and also some of these developments on where the political level and how they affect investment. we will be back with more shortly with chris mayer is author of the world right side up and still ahead don't know what you've heard about del many extracts on but the french got some dollars out of him in the form of bale will give you our three cents on the alleged key i am pete but first their closing market numbers. just put a picture of me when i was like nine years old on the job

a true. i confess i am a total get of friends that i love rap and hip hop is a pretty. but it was kind of yesterday. i'm very proud of the widow just as she played. you know sometimes you see the story and the seed so you think you understand it and then you glimpse something else hears you some other part of it and realize that everything is ok you don't know i'm charged as a victim. what

drives the world the fear mongering used by politicians who makes decisions to break through through it if it made who can you trust no one who is you know of you with a global machinery see where we had a state controlled. capitals school sessions when nobody dares to ask we do r t question more. welcome back so before the break we were talking about some of the great opportunities for investors that maybe you don't know about we're taking a break from some of the doom and gloom analysis of some of our economic problems to have a little bit of a glimmer of hope with our guests here but first when we come back i want to talk

about some of the national issues that actually are creating some economic opportunities elsewhere so let's bring in chris mayer back he's the author of world right side up his brand new book which gives lots of great examples and we're picking his brain for some of them so one of the really interesting things that you talk about in your book is the impact of nine eleven on investment you talk about how arab countries oil producing countries before nine eleven they were investing twenty five billion dollars a year in the u.s. and that that went down to one point two billion when they felt that their money maybe wasn't welcome here or they they felt uncomfortable whatever but that well started flowing back to their countries and you say that that economic benefit is still being felt today and you talk about dubai could you talk about that because i think it speaks to a little bit of a broader theme that for example people bring up a lot when i talk about m.f. global or other things which is that people maybe are no longer willing to pay a premium for feeling like their money is safe in the u.s. and instead that money is going elsewhere do you see that as an example of it yes i

would be a good example i think in simplest terms what happened in the buys they made it very easy to invest money they're. going to remove the other tax structure a lot of regulatory structure is not there so all that money flowed into the. room . and even now. real estate bubble but still i think the bar has a place it's a place for the rich in the middle east to put their money it's kind of like they're switching their old switch. and that's the old. one one thing i think is interesting you talk about visiting to buy before the bust in after the bust and you kind of had a different short term lesson versus the long term lesson what kind of is the difference yeah well in the you know i was there in two thousand and seven when they were going through their peak and something like one half of the greens in the world were there and places with excitement and construction and the second one was after the first in two thousand and nine and now. there's opportunity there friend

who lives there and bill is there for real estate prices. but its role is sort of the financial capital of it all you still still sell and that's something that i thought was interesting reading you were saying short term yes it's a lesson in you know kind of these short term things you can see but long term it's the same trend which is that the developing world continues to catch up big picture with the western world right and that's true for a lot of these markets i mean i expect they'll be big ups and downs in all of these different markets but the one theme across them all is this longer term longer term trend it's closing this gap with the western right as jim rogers would say you know china is the largest creditor nation in the world us is the largest debtor nation in the world yes china's going to have ups and downs but so did the us and i'd rather be with the biggest creditor speaking of china you talk about commodities and how commodities have been going up in recent years everything from coal and it's getting harder to find big deposits of this stuff and you talk about how china is kind of on to this and we've covered that before how they are acquiring resources and commodities from from different countries different places what

should i take away from that what should our viewers take away from oh if you take away from those if you invest in any sort of commodity like iran or china consumes half of the world's iron ore the world cement huge chunks of oil and copper so if you're investing in any of those things you have to pay attention to what's going on. so short term i'd be a little worried because i think it's going to slow down now but longer term if you can stomach about thirty i think it should be pretty well because. as countries move to more of. just roll move more into cities you tend to see my consumption right. along ok and i want to know how government intervention affects kind of all of these things both in developed and developing economies you see western central banks printing even just a story out today showed that maybe the fed has been monetizing some of europe's debt has some european sovereign debt on its balance sheet and on the flip side you

have brics countries that are getting together talking about lending in their own currencies trading in their renminbi making their own development banks how does that factor into these investments yeah i think that's important you want to get a feel for where the trend is and a lot of these markets overseas are going more towards open markets more towards free. currencies and things like that so the trend is good whereas i think in the u.s. you make your image going the other way you're getting less going less towards more close markets and more regulation and so that's where the relatives are between them to look at before we go should i be worried about the dollar when we look at that trend yes you should be and i think you should diversify your political risk i mean you know also tell me often i hear well investing overseas is risky well i think what's risky is leaving all your eggs in one basket so i think you want to diversify their exposure if you follow their point thank you a nice note to end on that was chris mayer he's author of this book world right side up and you can read it to get more details into the things we're just talking

about thanks greg thank you. all right let's wrap this up with loose change i've got to be true and shannon to talk about this last friday president obama met the deadline for appointing is nominee to the head of the world bank i believe nobody is more qualified to carry out the mission than dr jim kim. ok dr jim kim mr president not everyone seems to agree with us seems jim chemist coming under fire for a book he coauthored criticizing neo liberalism and corporate led economic growth

that's according to the financial times kim argues in the book that dying for growth that's the name of the book that in many cases those policies made the middle class and the poor in developing countries worse off my question to you i am pretty sure that this is a good thing that you have someone buying for the top spot of the world bank who is likely to have it it is critical of neoliberal policies that have really hurt a lot of developing countries group because of their policies but if multinational corporations. go into developing economies and rate them and give them won't sign interest loans then read them again but does that show how backwards the establishment is that he's coming under fire for this as someone is something that a little knot in the few points for leading the world bank what does that say about the world bank's priorities right glowing red flag about all the criticism that's gotten over some surprise or. so he doesn't prize this is this is this is this is

the model works you covered all the time i'm not shocked at all i mean this where you'd expect you expect this from the world but. from the financial press this is the this is the growth model like the idea that the this is not these policies that promote the entrepreneur and the independent investor they promote the they don't promote the fair development of the poor and i'm sure they get screwed over they would benefit if if you actually had independent people going in and all these large corporations that are basically dumping their economy yeah and you can see the p.r. campaign starting out because people are saying oh he's just too into health care he doesn't understand the importance of economic growth you know maybe dr can just understand the difference between good economic growth and bad economic and economic growth that benefits multinational corporations at the expense of people in these countries and the kind that actually causes development within these countries i like dr kim more and more every day shannon if you want to weigh in i have kind of a conspiracy theory about this i think this might be

a smear campaign but nigeria colombia with there are people who are trying to position this is if this is going to be a conspiracy theory thing and you know who would be behind a smear campaign larry summers ok that would be my bet. even jeffrey that's together let's move on because from a possible world bank president to a former i.m.f. chief and earlier i called him the former i.m.f. president i think the head of the i.m.f. it's called the managing director so i'm sorry i think i got that wrong please forgive me i hope you will buy this story because dominic strauss kahn of course we have heard so much about him over the last year or so he's been put under a preliminary investigation for his alleged involvement in a french prostitution ring what are his charges aggravated him being take a look. what exactly is this charge aggravated pimping what does it mean exactly

and how common a charge is this well i mean. not only having an affair with a prostitute but being truly. what we call christie. so you were arrested but he was ordered to appear thirty three thousand dollars bail little better treatment than he's been in the u.s. and prostitution is legal in france i should add but him being is not to indict him prosecutors would have to prove that he played an organizational role in the prostitution ring all i can say is when you get used to screwing over developing countries that the head of the iron man maybe you're just addicted to the roof of your well no i mean this is a great barrier is bad and i know it's a great metaphor for the i.m.f. what they do they go around. the developing nations and they're basically being out these these small countries and giving them give them over to more than half of

operations and banks who just turn them and burn them every day ok so it's not surprising that you've got basically a guy who's pimping out women little pimping our country can you want to me think i do want to get to this last story it's great. all right let's switch gears to something more lighthearted kind of so the wine and spirits exhibition the only one is going on in italy right now and it seems kind of electorate isn't the only one who likes to tell you in line. just. i miss some. of us. guys we only have a few few seconds but it leaves wine industry is flourishing despite the recession booming exports and foreign markets domestic competitive pricing are they just all getting where you stay because they're stressed out about their economy was a question that's a vice industry for social proof just like gambling and i heard that hannibal lechter you to actually work i was rooting for goldman sachs. that's what you did

before you leave you on that no no i think the story said that american consumption of italian wines is quite strong i don't know what that says read the tea leaves for yourself because that's all we have time for thanks for tuning in go to our website that joe and misha exclusive is there now that's you tube dot com slash capital account from everyone here thanks for watching have a great night. led mission in. the cretaceous free in-store charge agreed to make amends three. three steers relents told seem long enough knowledge video for your media project a free media dog to our teeth dot com. the

lead. the search for. me at least looking. to. see.