some of our top stories now here on r.t. live pictures now from egypt's tahrir square which is once again filled with voices of discontent as thousands disillusioned with the outcome of the revolution protest against the current rulers. clashes between ninety regime protesters and police in bahrain finally get the attention of the international community as demonstrators threaten days of rage to coincide with a formula one grand prix. and china turns is growing much towards the arctic as beijing's bid for the vast untapped resources alarms nations bordering the region. next aronofsky we go to washington when lorna stone looks at the role central banks played in the financial crisis capital account is next.

good afternoon and welcome to capital account i'm laurin lister here in washington d.c. these are your headlines for april nineteenth two thousand and twelve were in trouble numbers shows vanished banks may be running out of easy money to buy spanish bonds to prop up their own balance sheets so with signs of the next fire sparks from the smoldering ashes of the debt crisis in europe it's a good reminder for us that the euro zone's firefighting solutions require nonstop for ever participation by central authorities leaving the free market burns we'll talk about it and all of this brought to you by the power of global beggars and their friends of course at the i.m.f. which as it generally is gathered in washington for the spring meetings this week and christine lagarde message to global economic risk number one europe is keep up

and take a listen. people means implement. the reforms the tough they can place nationally. so basically you better meet those impossible targets through this the austerity is the condition of your i.m.f. bailouts is the message there so as the i.m.f. gets pledges to add to its lending firepower right now in washington is the classic criticism of the washington consensus the same as it ever was for this institution and will the u.s. taxman tax man rather extend its totalitarian reach congress is working on passing a bill that would not only revoke passports for people with seriously delinquent tax debt they would do it with no due process and this bill would also allow uncle sam to shut foreign jurisdictions out of the u.s. financial system for impeding tax and force me to say what we think let's get to today's capital account.

so reports are out that i mentioned that spanish banks which have been recently the primary buyers of spain's debt have used only all of the money that they've guard from the e.c.b. so they don't have much left to buy spanish debt you can see the numbers right there ok there's just a little sliver on the right that's left empty space and that's the money that they have left to buy debt it's not enough now the same goes for italy now this is all according to the wall street journal so it looks like we're back to our usual question what are policymakers going to do that's always the question it's always the policymakers forget the markets they don't matter anymore we will get to our guest about all of this but first allow me to step back for a second have

a few words ok the world we live in today really seems now even a little surreal a lot surreal not support it mildly because in the last we've been raised with certain free market principles at the core of our economic bukavu larry price signals are about as fundamental to the operation of markets as you can get but by constantly manipulating and propping up asset prices central bankers and they're too big to fail handler's have really made it simply impossible for anyone to claim that we live in a free market and price discovery once deemed essential to a well functioning economy is now seen as the fly in the central planners point man isn't it prices are a nuisance or so they say and they deem it their job to support them at ever elevated levels from now on to eternity seemingly europe. was the central bankers latest attempt at flooding the banking system with currencies who supply is now only constrained it seems by the limitations of modern computing but the problem is

the real world unlike the one of money and credit has limitations ok wealth unlike credit cannot be conjured out of thin air there are limits to what can be created and. what period of time and i say we've already reached those limits and central banks are doing everything they can to prevent the overdue onset of reality they are no longer the overseer of free markets if they ever were ok they have taken it upon themselves to act as kind of make up artists make over artists really hell bent on making over and sexing global asset prices beyond their substance beyond their years and the hopes that the rest of us wasted on easy money for decades won't be able to tell the difference i mean come on but not everyone in the world is so blindly any grid some are looking to escape from this centrally planned

nightmare of diminishing economic returns we are seeing it for example in the greek town of volos they're borrowing look at this b.b.c. report. if you crossed everything here is for sale from him a new alternative currency. offering goods or services the value is recorded in the central computer networks allowing them to spend their time on whatever they choose and it's not just in greece this banished towns of villa may or dissent tiago morgado and tara have all reportedly reintroduced the old spanish currency you see it right there the alongside the euro so here to talk about all of this i have paul craig roberts economist and former assistant secretary of the u.s. treasury under ronald reagan so welcome back to the show nice to see you thanks for being here. please stay with you ok so let's take it from the top because now that l.t.r. o. money seems to be drying out we have ellis pointing out that this could lead to

a renewed crisis in spanish sovereign bond that's really where the fire is heating up now so years will rise if there isn't pressure money available to purchase bonds we already kind of saw that this morning yields rose in the bond auction this is renewed concerns about the solvency a large nation states in europe and the odds are low that it's only been a few months since that last l.t.r. auction it was in february so what's new is this really the new normal because it doesn't seem central bankers are ever going to allow the markets to return to normal. well and i'm going to allow themselves to be bankrupt and close down and keep in mind that the original approach to sovereign debt was to shift all of the cost to ordinary people. all of their social safety net pensions employment wages selling of national assets. and that this

would work and it met opposition in the streets and so the european union came back with a. solution which was well we'll print some money to give to you to buy back your debt and you'll have to do less of those. i was staring sawing off about assets so. they they came up with a trillion dollar a trillion euros. and they're finding that it's not enough. and so they seem to be reluctant to create enough new money. to deal with the haitian or and they try to bring in the higher math and i know we'll get to that later. but what's so funny about this all is that. none of the policymakers in europe or the economists there seem to understand that if you

create money to buy back yeah this can keep interest rates low only temporarily. because as you create more money particularly if you're imposing austerity at the same time the money is growing relative to the output of goods and services so prices have to rise. and if prices go up interest rates are going to go up and therefore when you create money to bail out. the ultimate effect is inflation and very high interest rates so all of this is sort of a mindless episode that they're going through trying to avoid one problem they're going to create a much greater problem along for the future when they get huge rates of unemployment and high rates of inflation and since we have central planners and unemployment while we're on that i want to take the opportunity to ask you this you know every year who knows how many ph d.'s in economics are produced from american

amberson you've got a hundred or thousands most of whom are taught that if you lower interest rates you lower unemployment if the relationship is illustrated in the phillips curve someone that you have something that anybody who is i guess a going to get on a saucer probably know about it with rates near zero as they've been kept for more than three years now in the u.s. and we know what on employment start it's been pretty stubborn is it safe to say that this relationship is completely bogus. well it was always bogus that was one of the main points at the splats site economists established in the early one nine hundred eighty s. that the problems curve is bogus it was a product of the wrong policy mix and i believe you're raising a broader and deeper question and it's it's certainly you know why are the unemployment and the united states and in europe and in the united states it's mainly due to go our suring of so many jobs in industrial manufacturing jobs

professional service jobs and this is spread to europe they don't have the same extent but in addition they now have these austerity problem policies and closed on greece italy. ireland portugal spain and these then contribute so that is you drive an economy down and the unemployment rises its ability to service its debts declines so whatever the bailout even if the initial bailout was enough right it's not out enough because the economy it says we're sorry is not growing and it's getting worse so than a debt all because of having a year or so then i mean dr roberts we're having a conversation it seems all very clear what our policy makers missing and they don't understand that well you see i think the whole purpose in europe. was to use the sovereign debt crisis for two purposes one was to establish.

that banks are not responsible for their own mistakes the ordinary citizens are and so if the bags make mistakes and create losses for years to sions the cost have to be imposed on citizens and citizens have to make good those losses lot of banks and other words they're re installing served. yeah it's not about that a lot along those lines though you're saying these are this is basically going to. service the banks we just heard managing director of the i.m.f. christine lagarde today say that these european rescue mechanisms should be rejigged so that they literally directly give aid to the banks and just cut out the middleman of the sovereign are they just now saying hey cut the crap we're going to stop pussyfooting around this appearance that we're not bailing out banks really this is what it's about well that that's the more honest approach you have to get over that because that's what they are doing not bailing out greece they're bailing

out the barracks who are probably. goldman sachs financing you know. don't know greek greece could play so that's how they're going out and greece and. the banks and of course. itself is in violation of its own sure when it lends money cause it's only permitted to learn. the balance of payments just not committed. for. the deficit. problem so what we see coming out of this crisis is longest next. disappearing is chary of european central bank is just in case this is a very good story and so by refusing to face the real issue or create an addition to these other things we have spoken about yeah and that's something i

want to talk to you about after the break in terms of what you think the i.m.f. is really trying to become a bit and also some of that lawlessness that i believe we're seeing in the u.s. we will be back stay here i will come back after the break and have more with paul craig roberts economist and former as a secretary of the u.s. treasury under ronald reagan and also still ahead the payday lending ok of things big banks are bankrolling the practice even getting into the business themselves and yelp or wells their bank rolling in the process political candidates will give you our three cents but first closing market numbers.

wealthy british style. markets. find out what's really happening to the global economy is a report on our. welcome back before the break we were talking about the lawlessness of the i.m.f. and that is the b. and other institutions that's the case according to my guess that's what paul craig roberts believes he's economist and former assistant secretary of the u.s. treasury under ronald reagan so i want to bring him back in here to stick to this to say what he really thinks is is the goal here that so dr roberts we talked about

the i.m.f. before the break you think that they are being a lawless so then regardless of what christine legarde says about the i.m.f. watching europe to take care of its own business do you think that in reality the i.m.f. is wanting to become more like a central bank. it's not clear what's more they. could maybe do just we don't want to be without a role in a big crisis. made it maybe they think that there is a crisis and they're not part of it somehow or are in the sidelines but according to the i.m.f. charter is not what i think instance what the facts are. they were formed and your purpose is to learn to countries who are experiencing downstream it's difficult it's in their charter prohibits. from lending to go much for other purposes yet they are in the middle living the governments for corporations

now you know there is a look at the role of the media there's see today bloomberg reported only arms i am after getting three hundred twenty billion and you present again and this is this is what the report says true sure japan denmark its whistle among the countries to rally this week to the corage calling for a bigger living capacity here on the current three hundred eighty billion to shave the world's economy and against any deepening of europe's debt. well this report is nonsensical the loans are not shielding the world economy loans are shielding the private banks from the only stakes at the experience of the world economy i like that rewriting that headline there dr roberts i think your take is much more telling was speaking of the mainstream media when you talk about alternative currencies they would definitely i take a look down their nose sort out their nose i don't know wriggle their eyebrows but

yet we see in grays and in towns in spain countries adopted sydney towns adopting their their currency before the euro or alternatives to the euro to get around the current system so what do you think some of these initiatives offer add do they have any staying power in your view where you see globalism was supposed to unite the world economy instead it's fragmented with a grain. of these people are having to resort to local border in order to protect themselves from being rians served by globalism now the trouble these schemes is they don't they will work if they have if the countries need a connection internationally because they can't border internationally not with the american. reserve currency system so they can work locally but if greece for example is dependent on imports of international goods they won't be

able to move forward from that very effectively though we see for example. the so-called brics you know brazil india russia china we have they're trying to develop also an alternative system to the current to the current dollar based reserve currency system so that we may be witnessing now at the local level is the break up with the dollar hit its enemy. just as rising. russian. term group. international yeah we'll have to see how that all pans out and on what time frame while we are waiting on that while we're on lawlessness it is kind of the thing i really want to ask you about this bill that's making its way through the u.s. congress ok there's a provision in it that would for one revoke passports of people with what's deemed seriously delinquent tax debt this is even if they have not been charged with

a crime they don't have due process i don't know what you think is driving this because there is one angle which is financial and the government needs the money and then there's another angle which is that we've really seen an encroachment and civil liberties and due process in many different ways since nine eleven i'm curious what you think. it's true or. right because you know the government has already proved it doesn't need money and we have a huge deficit the current group for richard prince money. so. this law is being applied to people who are delinquent fifty thousand dollars to the i.r.s. doesn't that when i would pay for work thirty seconds so the war in afghanistan. it's not as meaningful. if the federal reserve is printing money you would know when to turn another to go though not so the whole thing has nothing to do with the

need for money it would be very interesting to see senators don't write bills and bills come in tomorrow either from the private interests to fund their campaigns or from the executive branch. and i don't know where this bill came from and i don't really know what the motive here is i suspect is just part of the shutdown of the liberty of the american people it's been going on pell mell you know through the bush regimes and in the regime yeah and there are so many and there's so many different instances of that and this is just one where that adds to that whole laundry list really i appreciate you for being on the show and talking about all of this that was that paul craig roberts economist and former reagan administration official yes.

all right let's wrap up with a loose change i demetrius and to keep talking about what i was talking with paul craig roberts about at the end of our interview about this bill it's called senate bill eight hundred thirteen and it may have brought down partisan bickering and the senate at least which has to take a listen. remember. i said let's look at what is in the fine print ok what's hidden is bill so the secretary of state can revoke or deny a passport to any u.s. citizen who the i.r.s. commissioner determines to have seriously delinquent tax debt the seriously delinquent tax debt as you heard our guest say is defined in amounts in excess of

fifty thousand dollars no due process there is more ok let's look at another provision if the u.s. government decides a foreign jurisdiction is impeding tax and force me uncle sam can shut them out of the u.s. financial system this passed in the senate hasn't in the house so that's where it stands right now this is pretty concerning the whole the reach into foreign jurisdictions is something we've seen with for example swiss banks that won't let americans open accounts there anymore because they've had you know the government come into u.b.s. and say hand over your client names and that's where they now hey if you don't do that it sounds like they could say you're set out of the u.s. financial system which is really required to do so many transactions globally and it's just one more step of seumas the way i know a lot of people that if they can create that measures over the years and it has been this sort of stuff because as you mentioned with paul craig roberts we've seen we saw a big change in this regard and i love it if you try to speed up as far as the state reaching in and one of things are going to great is that people could

immigrate here at all if there were more for you there were more opportunities and now your prospects of our five huge shifts if you want to go somewhere i mean it's all it's all part of this this breakdown in the spirit of all rewriting of laws to control grable and you know if they do on the flipside of this people's passports people who are worried about their money hey maybe they won't care because we did a story recently about how people are lining up to turn in their passports because there is that isn't it can and you want to add anything you completely stole my ankle i'm. i am i or silver lining because people are lining up to turn in their passports anyway passes could be good for the people who are lining this is like the thing i wanted to consequences but policy makers never understand you're pushing people out of the country you're pushing the wealthiest people and the most capable people experience you're pushing the village elders out of the village ok and if you don't have the village elders who's going to give guidance for the rest of the people in our village and that's the problem and who's going to invest he's going to vote for your ideas in the system of capitalism you need capital ok but

they don't want that they want to move to a post capitalism we're all they have is banks but credits notes of credit backed by nothing and may still be economy. well maybe businesses can go on the internet and do some crowdfunding with very little regulation or jobs i've made the trade off speaking to people that need money if these people flee that has money payday lenders is something that some people may do you see in their commercials before they're used by people who need a short term loan when they're between paychecks take a look need extra cash right now one day my car broke down and i wasn't going to give you some for the whatever the reason when you needed emergency cash with pay when i made a phone call and that was pay day one is here around the clock. ok well now not only are wall street banks getting into this practice payday lenders are spending big when it comes to politics those two always seem to go together don't they so was fargo has become making begun making advances to customers checking accounts

direct to posit interest rates are growing at two hundred seventy four percent for a five hundred dollar loan and second according to a d.c. watchdog group payday lenders are increasing campaign contributions for political candidates so these two go hand in hand we have wall street now looking at this as their revenue stream and then at the same time now all of a sudden this is getting more involved in the political process with candidate contributions and i would imagine lobbying you know sort of a complete different angle on this but when i saw a commercial i just didn't realize it just reminded again of how absurd this all is in this world we live in where these people have real needs and the product that's being sought to them is credit a credit line ok so no more do we support the idea of autonomous individuals and solver individuals not individuals need to have constant access to credit because otherwise they can't pay their bills they can't get through loans they can't we've

been able to get food once they have food stamps and the whole country will be on food stamps and j.p. morgan we issue the cards and what does it say about the fact that this is where there is growth ok people used to need money to borrow money in order to buy a home something very has been said now they need money in order to literally make ends meet between paycheck and dats where the growth is coming from the movers are really serious no shouting i want to throw in a light note for ten seconds here's really quick question for both of you yes or no should we regulate payday lenders. we should raise it i mean we should irish everyone right into the ground yeah i'm sorry you have to regulate payday lenders are you kidding you want to see coming like w. stars because they already have no money and then they're really in trouble that's all we have time for our so let us know what you think of payday lenders to be regulated because that's all we have time for as i said thanks for tuning in don't forget to follow me on twitter at lauren lyster and give us feedback on the show at youtube dot com slash capital account tomorrow is friday so that means i will

respond and until then from everyone here at capital account thanks so much for watching and have a great. all

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