good afternoon and welcome to capital account i'm more in the store here in washington d.c. here's your headlines from eighth two thousand and twelve greece's leftist leader says the bailout deal is dead greek stocks plummet to twenty year lows the s. and p. five hundred takes a plunge to a two month low fitch says greece leaving the euro say it will be bearable while u.b.s. legend art cashin explains how greece could end up back on the draw wow the headlines went from elections to drop and less than forty eight hours we told you greece was going to be a big deal we speak to investor jim rogers about real solutions and this spanish government says it will bail out one of the country's largest banks after saying it

wouldn't need to throw money at the banking sector any more hoops goodnow themselves with trying to prop it up with all the can kicking in europe and in the u.s. and the refusal to look at the debt overhang where our country's headed well we have some hard cold empirical facts to show the toll it can take we're talking a twenty five percent hit to real g.d.p. will tell you and and look who's taken on walls three there they are that's our show's producer dimitrios xenos with host of the kaiser report max kaiser we'll show you more let's get to today's capital account. so yesterday i sat here and i talked about the political uncertainty in greece in

the twenty four hours since the watershed national elections that are brought not just greece but the entire eurozone now it appears even more likely greece will remain without a government until new elections can be held which people are saying could happen in about a month now the party they received the most votes new democracy was not able to form a coalition its leader passed the baton to the party with the second most votes series which is headed by a young charismatic leader and alexis tsipras sipress has a herculean task ahead of him because the political landscape has become so fragmented that forming a coalition would be an accomplishment of massive proportions in and of itself now on top of that he's proposed five points that are the focus of his discussion with party leaders one of which includes the immediate abolition of the law granting members of greek parliament immunity from prosecution now this has been a longstanding privilege for politicians in greece needless to say these are

extraordinary times for greece and a true test of democracy in a country that made it a household name more than twenty five hundred years ago if the country is sent back to the voting boxes in a month there is no reason to believe that the result will be any more homogenous in fact chances are that the electorate could grow more impatient more radicalized meanwhile you're in brussels have already proven inept at managing the political the social the economic fallout in the peripheral countries that have been impacted most by this debt crisis so if these latest election results prove to be the straw that breaks the camel's back in greece they could portend similar results for other nations that find themselves in this same boat uncertainty a balance like never before however austerity is what gets a lot of the buzz these days i spoke about all of this with jim rogers he is famed

investor and author of this book a gift to my children a father's lessons for life and of course investing take a listen. i want to start with austerity because austerity is evidently what everything is to blame for the french and greek elections people are saying was an. election i have a report of an italian nuclear power firm boss being shot and the media is saying hey maybe this is an austerity backlash i mean it sounds like a joke but i literally have the article now you and i could sit here and have a discussion about how austerity perhaps has been mismanaged but is there a bigger issue that isn't being addressed properly and that's the debt overhang in these countries. of course this is the basic problem is bankruptcy and huge amounts of good for fifty years in the west we've been spending money we don't have a now the chickens are coming home to roost somebody has got to play with this we

may not like austerity nobody likes so scared but if we don't have austerity now it's going to be much worse and two three four years i don't like the fact that they will spend money they don't have either but they buy the show well that's an interesting point that you just had because the debt overhang is something that you talk a lot about we've talked a lot about it and some people will say you know but hey look at japan they've been tragic along they may not be doing well but they haven't fallen into the ocean and it's interesting because ken rogoff and vince and carmen reinhart and a recent paper addressed the long lasting consequences of high public debt overhang mr rogers and they found that across fifty countries twenty six periods have a debt to g.d.p. ratio of over ninety percent for at least five years one of their findings they found the real g.d.p. drops by an average of around twenty five per cent at the end of the deal leveraging episode so is it better to get it over with quickly or to drag it out

like japan was the sort of course is better to get it over with japan has it has had to last decades you know the japanese stock market is down seventy five percent from where it was twenty two years ago that's not a very good model if you as me and their dad is going on and i are you can compress them with mr to the scandinavia who are at the same time twenty two years ago had the problem that japanese did they took the pain a lot of people went bankrupt they had a horrible three years but coming out of the scandinavians had a wonderful fifteen or twenty years it's always better to bite the bullet missed your mistakes and start over instead of denying reality so what does starting over mean does that mean defaulting are does that mean what greece is doing because austerity there is just paying the creditors. no miss the greece still has an exam the problem if you look at the bridge actions or if you look at who is

there dead is still going on. there yes we supposedly. but they haven't been the bullet of course there's there's something there but nothing like the plane that has to happen you saw the elections the greek citizens the greek voters that we don't like we want to go to the beach and drink it was the longest. don't know about that there's been a lot of pain that's been suffered and greece as a result i guess the question is mr rogers for why because as you mentioned the debt is continuing to grow heavier because these measures are in order to pay the bailout pay their creditors so what would the proper pain be would it be defaulting would it be exit in the euro what would it be. the night of the days in the they might exit the euro it's the wrong thing for them to do that they exit the euro and they go back to the same old greece the same old drama you know few periods of inflation high interest rates turmoil economic problems then you start over i mean

the same old greek of greece for the past two decades or the same only it's not a very good model either i would not suggest they do that now they may do it because they don't want to take the plane what with the proper. miss the system sit down with your bankers with your creditors and explain that can be pay we're going to have an orderly reorganization the way all bankruptcies happen miss this to nothing you hear about this all bankruptcy is reorganize and start over it will take big losses the banks the creditors the people who made these loans are going to have to take big losses but miss those to you didn't make the loans you didn't spend the money that they didn't have and i didn't either so why should somebody else have to pay for the banks i totally airier sang along those lines and now they're finding this paper average often reinhart was that waiting for markets to said no problem maybe waiting too long because governments have the ability to

surprise market signals i when we talk about there's it's kind of you know the word that comes to mind is dad because we talk about this all the time isn't that the problem that markets can't signal a problem because they're being manipulated they're being a nest the tie is a little like the late michael jackson with propofol all. well the markets are letting somebody know that there is a problem i've been you've been seeing the price of a great bond spanish bond cetera you and i know it is a problem but so to the evil as though the markets you're right of being somewhat suppressed by central banks around the world wrongly and my view he probably of the bonds keep propping up the market that's not the that's not the message that should be going through to people the message it should be going through to be able if we have video we have made mistakes we have to start over so let's reorganize and do it in an orderly manner if you don't do it in an orderly manner on this list or eventuality the market says we're not going to give you any more money then that's

chaos that's a shambles that's when you have real turmoil worse and turmoil and you have riots in the streets many of these and you have serious problems began to think that that still happens this day and age and will happen and evidently despite all of the efforts in central banks to pop up the system and paper over these issues we're talking about the sister of eventually the them are in the government month and the central banks run out of other people's money and they it doesn't have what they matter what they do the market will overwhelm them that's coming you should be very worried about the next two or three years and certainly over the rest of this decade because there's going to be a lot of serious problem in the way in the world not just the web you're going to see a lot of people lose money you're going to see institutions that have been around a long time disappear lehman brothers have been around a hundred fifty years bear stearns has been around eighty years you're going to see

a lot more problems a lot more surprises because nobody is facing reality and speaking of not facing reality and you mentioned the role of central banks are talking about it now and as we will have this show go to air there is a hearing going on on the hill with members of the house committee about have a reform of the federal reserve now taken out of the equation the option to abolish it how practically could or should the fed be reformed. well it has got to be the full effect the central banks were originally designed a hundred odd years ago when the when the great british bank of england was reformed started over it was given the task that when there were when there were panics in the market at the central bank was to step in and lend the money at high rates of interest against sound assets and yet through the package that was what they were supposed to do and the bank of england for a while done

a brilliant job at it one hundred twenty five fifty years ago that's what the senate the central bank was supposed to do that's all they should do if you ask me our central bank was set up with the mandate to make sure we had a sound currency they wandered away from that in spades in fact they've done their best to destroy a sound concept of the past few decades if you want to start over you say ok well have a central bank all you can do is in times of panic you step in you take sound collateral out of the sound collateral from people you think will so you charge them high rates of interest and you get through the panic if people come in with an unsound collateral or people who are not going to survive you step aside and let them fail right so no more and there's trash to cash adds zero percent interest rates. still ahead jim rogers on what the bernanke contrary and indicator is telling us

about jobs but first their closing market numbers. what drives the world the fear mongering used by politicians who makes decisions to break through it's already been made who can you trust no one who is human view with the global machinery see where we had a state controlled capitalism is called sessions when nobody dares to ask why we do our tea question more. you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else and you sure see some other part of it and realize that everything is ok. i'm

charging is a big issue. here is what you consider a. bump in the ilona still you know get the real headlines with none of the most of the problem with the mainstream media today is that they're completely disconnected from the viewers and what actually matters to those viewers and so that's why young people don't watch t.v. anymore if they want news they go online and read it but we're trying to take those stories that people actually care about and transfer them back to t.v. . welcome back also going on in the us today this senate republicans blocked

a bill that would extend low interest rates on federally subsidized student loans now the point is not to analyze whether the government should or should not be subsidizing student loans that's another issue entirely and by the way politicians on both sides of the aisle support an extension of the interest rates at the level they're at but they disagree on how to pay for it but the facts are that if a deal isn't reached in july reportedly more than seven million students would see the interest rates on their loans double from three point four to six point eight percent so the question is what happens if there is no deal will we see student protests in the u.s. as we've seen in montreal and to london will we see a one trillion dollar student debt bubble pop and result in a taxpayer funded bailout of under water degrees we don't know but your rogers predicts economic turmoil and riots ahead in any case but first the jobless market

that these students took out loans to prepare to enter only to find dire prospects take a listen one of the things that the fed obviously deals with these days with its dual mandate of unemployment and price stability is unemployment and something that evidently reportedly is on the fed's radar these days is history cis which is i'm told what happens when the five point one million americans who have been unemployed for six months they have declining chances of finding work less likely for them to ever get a job and long term high unemployment becomes just that long term now ben bernanke he says that hey we're not here yet in the united states but my question to you according to the ben bernanke contrary an index does this mean indicator you could say does this mean that we are there in the u.s. because i know you often say that bernanke is always wrong. i say look at his foot look at the facts and not. just look at the factual cities always or all of course

where there you know as well you know as well as i do that the government isn't pledging that here's the unemployment figures are much higher than what the government tells us but they have these ways to manipulate them every month the use of birth and death adjustments that say people have dropped out of the city looking for work this very easy to manipulate the numbers and then manipulate the numbers these numbers are not real yes we've got serious problems. in the midst of lanai he doesn't know it maybe you're watching r t t.v. speaking of what you watch on t.v. i do have to ask this because i was catching up on your interviews with mainstream media outlets that you did when you were here in the states recently and a lot of them seem pretty surprised maybe incredulous over some of the responses that you give to them do you think that i don't want to put you on the spot to say bad things about any of these people who i'm sure that you like very much but maybe them more broadly and generally is the mainstream media and the us

asleep about some of these things. well with the mainstream media everywhere is the sleeper things they are by definition they are the mainstream of the conventional wisdom it probably wouldn't be the mainstream that they did because. the conventional wisdom is nearly always been wrong though i'm not the first person to figure that out we all know that if you if everybody is thinking the same thing somebody is not thinking i'm not the first to figure you are maybe the most prominent that i have seen recently the whole continuing to go up against them and try and set them straight you know long the lines of the u.s. jobless situation though i do want to ask how you think the u.s. is going to afford this amount of unemployed people and the pressure that it puts on social welfare programs because mr rogers something i just saw disability

insurance ok these are people that say that they cannot work because they are physically or mentally injured ninety nine percent of them stay on it until they retire those numbers have increased by one point six million since the recession twenty two percent increase economists some of them say this could account to up to a quarter of the decline in the labor force participation rate how is the u.s. going to continue affording this can the u.s. continue affording this. first of all is this that they don't stay until i retire until my da you and i are going to pay for these people for the rest of their lives serving the rest of our lives as well how can the us by phone we miss lives that we're not going to be able to pay for it is physically impossible financially impossible for the us to pay the obligations which it has incurred that's just today the system and our debts are going up at the rate of over one trillion dollars every year this is it cannot be paid the u.s. is facing bankruptcy we're going to see more crises more time on the good news new

good news this year mr that's because there's an election as an election in november everybody in washington will last things that seem to be good if people outside of washington know things are not so good but after the election we're going to start seeing a lot of bad news the market is going to come to power again. the next two or three years are not going to be fun and you know you said that you think that riots are going to be in the united states do you think that that's going to happen in the next two to three years that you predict that the economy well will have a lot more trouble. yes there's certainly going to have social turmoil we're having social turmoil around the world already munden london of all places last year had met him all over the u.k. at message riots we've been having disturbances in the u.s. and some u.s. cities in the last year or two as you know know things are going to be much worse in the next few years because nobody is facing reality and so what happened in

greece when the governments finally started acknowledging the problems that sort of so i don't particularly like saying that some american taxpayer an american citizen an american voter like you but somebody has got to face reality speaking of facing reality it doesn't look like politicians are you have mentioned that clearly this is an election year you think that that's why good news is what's dominating the headlines one interesting thing though we have seen a rise in support from parties outside of parties outside of the mainstream in the u.s. i can't like ron paul and france a party like the national front so i'm president of proport do you think we'll see a continuation of support for parties outside of the mainstream and what impact do you think this will have on western economies no of course you see that the political system agrees as parties which didn't exist of five years ago change years even in germany you're starting to see the new parties arise i mean in germany in a prevention election sunday new party got eight percent of the vote eight percent

come from nowhere so you're going to see more of that you're going to see it certainly in the us not just in the rest of the world you're going to see it here too because people realize the mainstream as you put it the mainstream has gotten us into this situation and this list are a pox on both of their houses the democrats and the republicans got us into this situation you and i didn't get us into this situation the democrats and the republicans so now people are starting to say well wait a minute these guys have been rome for a long long time let's try something new and just a follow up real briefly if you could do you see this as having a positive or negative impact on western economies. on the economy yeah well you're going to have more fracturing of the political system which makes them more turmoil if you will and that will be negative credit cards and it's not going to say that nothing is going to solve the problem until we have a crisis or

a similar crisis and then somebody steps in and acknowledge that the voting public steps in acknowledges reality and says ok we have to start over it's not going to be far it's going to be painful it's going to be confusing it's going to be perplexing various that this list while i'm learning to farm in the meantime mr rogers i appreciate you being on the show thank you so much always my pleasure. all right let's wrap up with the latest change dimitri is going to help me out with this one dmitri riddle me this how do we have so much irony wrapped up in a one story ok i milwaukee woman was fired from her job at wells fargo for

a crime she committed forty years ago and according to a local affiliate that crime was not something dire ok she was not an axe murderer or a background check revealed two shoplifting convictions forty years ago here's most of our guys take a wells fargo spokesperson tells the milwaukee journal sentinel we are bound by federal law that generally prohibits us from hiring or continuing the employment of any person who we know has a criminal record involving dishonesty or breach of trust. unless of course if you are engaging in robo signing or in defrauding of minority homeowners which is what a new investigation is going on over into wells fargo how does this mean i just don't get it well and then also you forgot the course on jamie dunn yeah i know i was speaking specifically to in the case of wells fargo i know i know i mean i know

. it's a great irony and so you have preemptive firings going on america where people. have not committed a crime long ago in the past will petty crime four years ago year you can't have a job if you shoplifted but if in the recent few years you're a larson nest you're good to go right well that's your table defrauding wherry right if you committed a crime that was a petty crime that was a big crime and if you have a president recently for not currently committing huge white collar crime the norm wants to get in this country but again you're not doing if you're committing big white collar crimes which is why yeah all these big shoplifting is small because you need to have a bigger criminal record in order to bring up meanwhile ron paul faced off with his nemesis his favorite nemesis the federal reserve today and hearing about reforming it you heard me talk a little bit about it with our guest john rogers here he is talking about the fed

and i think what has happened here in these last five years it has been recognized by many the monetary policy in the federal reserve has a long to do with the creation of some of our problems in their shortcomings when it comes to solving these problems. so we know we know his draw we know ron paul's drill the congressional hearing was titled the federal reserve system mend it or end it hosted by the house finance committee chair himself ron paul what's interesting is there i watch some of this hearing and there were some critics of the fed that made some good points and then you have a hearing about reforming the fed what reform really sounds like when you talk to a former fed vice chair who testified and literally it sounds like she's in outer space because she was asked for example if the fed has enabled congress to borrow to the extent it has by being a constant customer of the feds and keeping interest rates so low for the u.s. government are she's like no other we're talking about everybody still buys u.s.

treasuries so you know it's everybody's fault but the fact is the largest holder of u.s. treasuries it is the biggest customer the fed in china i just i don't understand this really signifies to me what reform means in washington it's just the ball we do it with every soldier so just get. it so it's because reform just doesn't go anywhere and from taking on the fed to take you know wall street. by showing you this check out this video look at who it is dimitri along with max kaiser and some other dude we have to figure out who he is but anyway you tube user r.g.b. anarky. made this send it to was very cool and believe you with it you can check it out it's on our our you tube channel youtube dot com slash capital account under our favorite videos right. you can check it out so for now that's all we have time for so go look at it now because we don't have time for more show and don't forget to follow me on twitter at lauren lyster and give us feedback at youtube dot com

slash capital account and from everyone here as always thank you so much for watching come back tomorrow and have a great night. there hasn't been a thing yet on t.v. . it is to get the maximum political impact. before source material is what helps keep journalism honest we want. we want to position. something else.

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