money on its military than every other country in the world and you believe this is a huge of waste of money and we're going to leave you without for now that's going to do it for the news we'll see you right back here and a half hour. good afternoon and welcome to capital account i'm laura lister here in washington d.c. these are your headlines for march twenty seventh two thousand and twelve ben bernanke he's going 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 mache. that protected those investors they had to do it a real shit would be. your misinterpretation of the crisis meanwhile timothy geithner pushed for more money funneling through multilateral institutions that fund bailouts sound other agenda items. these institutions of course.

are broad american strategy to protect the interests. now if you're just sick of listening to all of the us is all of 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 the other 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 pick 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 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 him stand

up 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 and 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 thesis 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 enjoying 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 thank you very 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 pick 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 since then and the twilight because twentieth century and aside from the investment 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 it's right and this process is taking over taken place over a long period of time it probably peaked in one thousand. remarkable to think that in the one nine hundred fifty s. u.s. alone represented half of the world's manufacturing output and the us western europe ninety percent of the world's manufacturing 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's the world we're moving moving towards it 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 a younger population they don't have the issues we do and there's a lot of work to be done yeah so 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 what you point to is liquidity you said it used to be that the amount of shares traded i.b.m. on one day in new york were more than all the shares shaped traded on a day in shanghai or bombay so how is that changed and why is that an important indicator but as well i think it's an indicator that. emerging market companies have done a lot bigger used to be even if they're only maybe ten companies that had a billion dollars in sales and now there's something like a more so you have invested man you've just gone up tremendously you can reasonably

buy. resilient companies on the new york stock exchange you can buy russian oil companies in operate 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 those ideas point investment trends from autosport of suppliers to farmland. and i want to get into farmland in a little bit because that's something we care 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 of the daily reckoning eric fry when he was giving the example data 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. colombia in debt that was all one

notch above junk and then if you look at you have this in your book to the how latin american stock exchange's performs some of the stock markets and latin america versus some by stern european stock markets so what is the market telling us and all these trends market is telling us that these countries have some people that we all want these countries that resource rich so they've been right in the commodity boom again i can't emphasize things like population being young and they don't have a lot of the 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 and 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 not so foreign reserves that part of us 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 you to watch 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 and us consumers more and retrenching mode trying to save more money to 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 for vallas they have. washers microwaves so they have appliances even though they have literally just gotten running water but that's beside the point you were talking about farming and let's talk about that because it's something that we often hear i want to bring up another chart from your book shows how well western canadian

farmland performed during the seventies versus the s. and p. and money market fund now the seventy's were a period of high inflation and there are concerns among certain camp of people that that's something that the united states could be facing and then we're headed for and as 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 farmland to generally because in some parts of the world farmers expensive in some parts of the u.s. farmland sample i don't think is a particularly good investment right now for western sydney is cheap for the provinces around it and cheap compared to the us and that's like you say some of it is it's going to be because she's been debased and farmland it's a real tangible asset will 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 so we see

a lot of that also 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 all good so it balances yeah that's another good point 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 stand cities we have certification we have water pollution problems to deal with and so valuable farmland is half a million or i should say pristine farmland is a valuable commodity in a lot of these emerging markets where you can get a we talked about. the market that's one place but this gets one sort of is because it has only been open to foreign investment i would say certainly within the last decade or so all those sort of closed off into the markets ok. definitely firmly in places like colombia even i mentioned in the book there's

a good market that market is virtually untapped in form and a lot of. land there that because of the drug lords before that was sort of closed up and so there's a lot to me to bring that. acreage on line and then you talk about i guess kind of the flip side of that which is that emerging markets growing in their consumption for me and other things that replier grain growing their natural fashion becomes do we need to worry about food shortages not just in the developing world but in the developed world i think the developed world we don't we don't have to worry about food shortages because we're the ones we have money in. that it will hurt i don't know exactly maybe 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 farmers so there's these again come back to some of the best insurance there's. irrigation a new way to use. fertilizers and things so i don't think we'll have

a problem producing ultimately but i think time is going to get vestment to get there and when we do have disruptions. then we could have serious situations in emerging markets i mean some ways is what helped to bring. certainly certainly had a lot of people turned up ok yeah what about property rights because you're talking about farmland in places. like colombia and scotch are one canada. how much does this play a role in people's decision to own land and invest in places because even we've seen in the developed world in the us m.f. global they show that your money's not necessarily say right and that's a very big issue abroad too i know i was in brazil. for my own project there and that basically got quassia when the brazilian government came out and started putting restrictions on foreign investors so that's an example where you have a lot of land and big opportunity there but because of property rights questions and difficulties of actually getting the land it's not so easy and that is what's sort of frozen a lot of land in many different markets so that certainly that's

a big issue when you're talking about farmers ok what about just in your travels overall when you come 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 are from places where you see the best opportunities for somebody that wants their money's safe they want to know that they can invest and they can retire with their family and they don't have to worry about it m.f. global or their farming confiscated or whatever what do you see as kind of those golden opportunity well that's this well there are 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 nicaragua for example is a country that is actually pretty favorable for investors and there are there's a development on that publishes a part of called rancho santana for example and that's in the pacific coast titles really clean here and that'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 thinking of making

a rug work in general but it turns out it's a really good place to retire and put some money to new nicaragua but 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 more of 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 dominic strauss kahn but the french got some dollars out of him in the form of bale will give you our three cents on the alleged p.i.m. peak but first the closing market numbers. you just put a picture of the need when i was like nine years old when she told the truth.

i may confess and i am a total get over that i love grabbing him because he is a planned trip. he was kind of yesterday. i'm very proud of the world with its place. you know sometimes you see a story and it seems so. you think you understand it and then a glimpse something else hears you some other part of it and realize that everything is ok you don't i'm trying hard look at the big picture.

what drives the world the fear mongering used by politicians who makes decisions great through. who can you trust no one who is you know you would have noble missionaries where we had a state controlled. happens it's called sessions when nobody dares to ask we do our t.v. 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 taking 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 west 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 or i think in simplest terms what happened in the buys they made it very easy to invest money in their. tax structure a lot of regulatory structures and there it's all about money flowed into the bargain. and even now they have. real estate bubble but still i think why has a place it's a place for the rich and the middle east to put their money it's kind of like their switzerland their old swords. and that's the world. well and one thing i think is interesting you talk about visiting to buy before the bust and after the bust and you kind of had a different short term lesson versus a long term loss and what kind of is the difference yeah well in that you know i was there in two thousand and seven when they were going through their peak and something like more than half of the cranes in the world were there and places and so was the excitement in construction and the second time i went was after the boss in two thousand and nine and now i think there's opportunity there i have a friend who lives there and bill is there for real estate prices. but its role is

sort of the financial capital we 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 a 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 a lot of these different markets but the one theme across them it's a longer term longer term trend it's closing this gap with the western part right as your largest would say you know china is the largest creditor nation in the world u.s. is the largest debtor nation in the world yes china is going to have ups and downs but so did the u.s. 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 up before how they are acquiring resources in commodities from from different countries different places what should

i take away from now what should our viewers take away from that oh if you take away from this if you invest in any sort of commodity like iron ore china consumes half the world's iron ore half the world's. trunks of oil and copper so if you're invested in any of those things you have to pay attention to what's going on in china and so short term might be a little worried because i think china is going through a slowdown now but longer term if you can stomach the volatility i think you should be pretty well because. as countries move to more of. as they move more into cities you tend to see my consumption right there 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 investment 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. 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 more taxes so that's where the relative. to the quickly before we go just 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 will 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 and save you from 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 chris thank you. all right let's wrap this up with loose change i've got to meet three and shannon to talk about this last friday president obama met the deadline for appointing his nominee to the head of the world bank i believe that nobody is more qualified to carry out that mission than dr jim kim. ok dr jim cam mr president not everyone seems to agree with 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 ken 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 and developing countries worse off my question to you i am pretty sure this is a good thing that you have someone vying for the top spot of the world bank who is likely to have it that is critical of neo liberal policies that have really hurt a lot of developing countries grew because of various policies benefit multinational corporations. that basically go into developing economies and rates them and then give them loans high interest loans and then rate them again but does that show how backwards the establishment is that he's coming under fire for this as someone who is something that a little knock on the few points for leading the world bank what does that say about the world. what i'm glowing red flag about all the criticism that's gotten over the results of. so there is a prize this is this is this is this is the model that's how it works covered all

the time i'm not shocked at all because where you'd expect you'd expect this from the world bank. from the financial press this is the this is the most 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 poor anyone should they get screwed over they would have benefited if they had if you actually had independent people going you know these large corporations that are basically pumping and 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 kay 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 by major area colombia there are people who are trying to contest that position no no this is if this is going to be a conspiracy theory thing do you know who would be behind a smear campaign larry summers ok that would be my bet. even jeffrey would act 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 dominique strauss kahn of course we have heard so much about him over the last year or so he's going put under a preliminary investigation for his alleged involvement in a french prostitution ring what are his charges aggravated pimping 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 on truly. what we call prostitution. so you were arrested but he was ordered to pay a thirty three thousand dollars bail little better treatment you've got then he's gone in the us and prostitution is legal in france i said but pimping is not to indict him prosecutors would have to prove that he played an organizational role in a prostitution ring all i can say is when you get used to screwing over developing countries that are headed i am man maybe you're just addicted to the room there was no i mean this is a great i it was bad but only you know it's a great metaphor for the i.m.f. and what they do they go around him. developing nations and they're basically pimping out these small countries and giving them give them over to multinational

corporations and banks who just turn them and burn them every day ok so it's no surprise that you've got basically a guy in p.r. women with little pimping our country can you want to and he thinks i do want to get this last story great. all right let's switch gears to something more lighthearted kind of so the wine and spirits exhibition and the early one is going on in italy right now and it seems kind of electorate isn't the only one who likes italian wine. sound system so i just i just asked. i miss some of. us. so guys we're only have a few seconds but at least wind industry is poor shane despite the recession booming exports and foreign markets domestic competitive pricing are the italians just are getting wasted because they're stressed out about their economy because of course it's a vice industry it doesn't serve social proof just like gambling and i heard that have a look that it's actually worked i was waiting for goldman sachs. apparently that's what he did before not only have you won that know it all out i think this story

said bad merican 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 changing and go to our website that joe and michelle explosive in there now that's you tube dot com slash capital account from everyone here thanks for watching have a great night. illegibly

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