it's. good afternoon and welcome to capital account i'm lauren lyster here in washington d.c. these are your headlines from monday june fourth two thousand and twelve billionaire hedge fund manager george soros says the e.u. is like a bubble and authorities will not be able to meet the demands of the market coming up here now it doesn't keep crowds from trying of course as officials reportedly push for new master integration plans what are they doing to fail when the mood is this negative was the very poor mation of the e.u. made possible by this mood to begin with. its harsh. words are going to bout bull market mania with that exhibit

a robert proctor founder of elliot wave international is here to explain and that's lobel trustee takes aim at john pores and himself in a report the trustee says he may sue the former c.e.o. and other m.f. global executives for negligence and breach of the judiciary duty the new york times also reports that bank of america's top execs and those meant to police them are likely to catch heat for new revelations about the banks' bad behavior during the financial crisis that's come out does bear market psychology we ask mean we'll see more aggressive attempts to hold bankers accountable try to answer that and is the downturn in the dow a harbinger of a major economic contraction ahead we'll tell you why the r. word recession may be making a comeback let's get to today's capital account. so

george soros is known as many things but he's known as the man who broke the bank of england so hey that could be one reason why when he gives a speech saying europe has the re months to save the euro it gets a lot of attention now here's a snippet of what he said over the weekend. but we are at the in the inflection point after the experience of the three months window the markets will continue to the money more but deal authorities do not be able to lead the balance. but we know nothing will stop e.u. authorities from trying and german press is reporting top e.u. and e.c.b. officials are working on a master plan in fact to try to get the eurozone out of crisis which they will

reportedly present at an e.u. summit in late june does any of it matter though given the negative social mood is the tide flowing against integration and there's nothing to stop it and we have to look at this within the context of the bull market euphoria that the eurozone was born from to begin with as soros notes in that speech in the boom phase the e.u. was what this cycle analyst david tuck it calls a fantastic object unreal but immensely attractive now that is something our next guest often talks about and he pinpointed this euphoria this peak and positive social mood back in one thousand nine hundred eight is a reason why the european union was destined for disintegration he's robert proctor founder of elliot wave international and author of this book conquer the crash you can survive and prosper in a deflationary depression and he is here to tell us what he thinks is ahead and

what he still believes is a deflationary coming up ahead of us deflationary period so first of all robert proctor welcome to the show thanks for being back on capital account yeah thanks for having me back we love to have you on so you have been talking about the disintegration of europe since one thousand nine hundred ninety eight i mean a long time ago and despite everything we've seen you still think that we have a few more years several years before we could reach a bottom so what are we looking at in terms of declines here. well you know most people are looking at these events coming out of europe and asking what they mean what they're going to cause so but i think they're all results in the results of the change that you just alluded to big change from extreme euphoria in one thousand nine hundred nine and double top and you keep those and seven. so what we've had since which is a retrenchment in that mood and people are less bullion then they were and that's all it has taken to show the weaknesses in the entire euro structure and in the

entire used archer's well so what signs should we be looking for though to to figure out when this is the bottom law is it political developments or economic developments or a certain measure of unemployment. you know one learn it's the opposite of the things that we saw in one thousand nine hundred eighty we're going to see things break up and people looking belligerent and acting belligerent toward each other we're going to see social unrest increase we're going to see more regimes fall and we're going to see more alliances break apart and those are the kind of things that i expect to see it alone when people at that time come out and say ok this is proof that no one will ever cooperate again i think will be on the other side a very positive bullish side saying no this is a sign of a bottom and we can look forward to many many years to have a positive change very similar to what we had in seventy four and eighty two and that and that period in between so i said just to be clear you think that there will be exit from the euro zone and a breakup and until then we haven't seen

a bottom. but it's not just that i mean we look at measures of optimism and pessimism i think that's probably our strongest area in this in sentiment terms in terms of the market and there are many long term sentiment decatur's that are still pinned to the ceiling there's still a lot of optimism as there has been ever since nine hundred ninety eight we had a little decline in it on a long term basis in the crisis of two thousand and eight nine but it was just a minor blip in the overall optimistic historically optimistic mood as i measure it by dividend yield and by the percentage of cash in mutual funds just to give two examples there still is extreme levels we're nowhere near a bottom on those on a short term basis you can argue or so but the big picture is what matters here in the short term picture just does not matter ok and looking at where we are now and in terms of some pessimistic symbol there the chart that you feature and your report where you point to deterioration in confidence in banks as measured in your view by the decline in deposits and banks that are our viewers are looking at that chart right now so the way the euro system banks work though and the way the

central banks are set up when local banks lose deposits and they can still operate they were cycling up funds from the e.c.b. so what would it take for this lack of confidence that you're showing there to manifest itself in terms of actual. bank runs you know it's not that easy because as we've seen the european union has been depending on the solve in countries such as germany to hold up the countries that are very very weak in spending like drunken sailors and that cannot continue it has not been really the european central bank that's gone and said we don't need anybody to back this debt we'll just do it ourselves these even though they're called central banks they're still operating as banks which means that their assets have to be good enough to back the money that they've sent out lent him and i think we're reaching the point where that is going to become a more important issue than it has in the past i think particularly the fed has assumed a lot of things a they were buying would be perfectly good throughout the cycle and i think once we

head into this second drop which is going to be a repeat but i think even stronger than two thousand and eight that's when people are going to start realizing that some of these assets may be suspect and i think we're going to have some internal dissension in the central banks about what there is should do and i think we're definitely going to have political headwinds we already have that somewhat when they were fighting over the budget in the united states i think we're going to see more and more of that in terms of you know it's not going to be as easy as they think to bail out just about everybody particularly when most of the debts are bad and that's my view. and speaking of your view last month in global markets perspective and the forecast you called for the rebirth of a global bear market and then what do we see and made the dow plunged worst month in two years our viewers are looking at the chart closing down six point two percent commodities took a bigger head temp way percent they were down oil dropping nearly twenty percent but when you look at some of the calls for stimulus for keyway which some and

that's worth maybe hoping for and some arguably have had said have credited to we would boosting actually prices how does that factor into your prognosis but think about this even though the fed did record buying in two thousand and eight they didn't make. call it a q.e. i call it q. easier but it was a trillion dollars of the buying two more q.e. is after that do you want to q e two despite all of the massive inflation and they've also helped bail out the european banks as well despite all of that real estate is still down about fifty percent as you pointed out commodities are down and they topped in two thousand and eight that's four years ago well top back then as well you have to go back to april twenty ninth two thousand and eleven to see the more recent highs number one in the new york composite index number two in the in the commodity index number three in the foreign currencies even silver topped on april twenty ninth of two thousand and eleven people have kind of ignored that high but i think it was crucially important to me was the real recovery high was made sort of

a double top here in twenty twelve but this is despite all these massive attempts at inflation you can only imagine what would happen if they really realize that there's too much to handle and start slowing that inflation pressure down we're already in such a deflationary pressure situation and i think this is why the markets are finally beginning to yield so do you think that there's no amount as printing or stimulus that central bank can do to avoid the kind of the place in your becoming wealthy just around the prices sure they could but what they're doing is they're trying to keep all of the debts out there in the world good and they're doing in two different ways the central bank is doing it by taking value from savers everytime they print more money when they take in treasury bonds they're stealing value from savers and when the government does it by say guaranteeing the debts of fannie and freddie which ideally should belong to the private people who took them on there they're putting the burden on innocent taxpayers so this works for a while you know they can say oh the public is going to pay for all of this and some point the public's going to be annoyed i think we've seen the little sparks of

that in the political arena already and i think at some point they're not going to be able to do that anymore social mood is in control and when it really turns down and that's going to be evidenced by lower stock prices even from here and coming months and. in coming years could see one by one all these confident people beginning to express their own because there's a scenario will be going is the extent that once people feel a little disconcerted and uncertain i think that's when you're really going to see the bear markets region and you know ultimately nature is stronger than a few directors and i think we're going to see that in the next four years the power of the markets is going to overcome these technocrats trying to pull the levers although that pessimism that you that you said we've seen and hence there's lots of reasons to be pessimistic about america's finance chronic trade and budget deficits being just one of the debt debates we've seen plenty of reasons despite this what we see is these record lows that treasury yields have been hitting

against on friday we saw a record setting low for the ten year treasury yield that i think we have to show our viewers what it's been doing so what do you think these types of unprecedented moves reflect. and lead us that one because we've been on the side of predicting lower interest rates throughout this entire period and the economists calling the recovery work we're calling for higher rates and the bears telling for hyperinflation we're expecting higher rates but i think we've been right that deflation is still the main despite all of the attempts of the central banks deflation is still the main force going on and that shows up as you just pointed out a lower rates in fact the ten year note is yielding the least that is yield in the entire history united states going back two hundred years that is amazing however i think that even though people are saying it's a sun sign of short term fear that people are buying these these treasury bonds it's really also a sign of long term complacency because they're so sure that all the bonds they're

bought in some are treasuries others are buying municipal bonds and even junk bonds you know they're very complacent that the people issuing these bonds are going to pay a lot we're not so complacent some point at some point in this cycle as we had deeper into deflation we're going to see rates begin to rise and we think they've already started on the weaker end of the spectrum junk bond rates have begun to creep up we think muni's are beginning to creep up and i think before it's over it's even going to circle around to the treasuries that's going to be the crisis time just as we saw in greece when the crisis hit rates soared i think that's ahead at some point so we have to be aware that even deflation can give you higher rates but it's not because of you know the increase in inflationary purchasing power is because of fear of default interesting and before that happens i want to ask you when we get back from break how low you think treasury yields can go in the enter and so hold on right there we will have much more with robert proctor author and founder of elliott wave international also still ahead they may be suffering from massive

unemployment but one small village bank there is something much more important to fund we'll tell you what it is a little strange but first your 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 you know maybe you who with the global machinery see where we had a state controlled capitalism is called sessions when nobody dares to ask why we do our t.v. 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 you thought you knew you don't know i'm sorry was a big issue. here is what you said. but in the alone a fellow will get the real headline 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 we're talking about deflation among other things with robert proctor founder of elliott wave international and author of conquer the crash you can survive and prosper in a deflationary depression and before the break mr parker we were talking about yields these record lows that we've seen for a ten year treasury yields as just one benchmark so you predict that ultimately we will see interest rates rise but in the interim how low do you think we could see these treasury yields go. well we think they're pretty much making bottom as we speak this is a different change of opinion over the past thirty years that we have many indications right now that they've gone a little bit. to the point where people are now embracing the trend you know as you know all last year and in the first few months of this year people just hated the bond more and they said this is the worst everybody knows rates are going up you don't want to know about bonds well now they're embracing them the latest figure we

just saw from the d.s.i. the daily sentiment index on bunsen which is a poll of futures traders shows and ninety seven percent of them are bullish then the first time we got into the ninety's last of august it's been hovering in that area with a few periods of exception all the way until now that's a long time when traders have been very very bullish we've also got what we think is perhaps a completed elliott wave count there under the only way model for rates on the ten year treasury note we find large speculators have been chasing the trend and generally when they do that you're nearing end of that so we think for the first time you know we've had this great twenty year move up in the stock market we had a ten year rise in precious metals and we've also had a thirty year eyes in bonds and i think all of this is part of the great grand supercycle top and the biggest complacency in recorded history. so i think this may be the last big bull market that's topping out moments oh wow ok i know obviously

forecasting is always a game of probability event and we can't sit here with a crystal ball and pinpoint but i am i am wondering you know for anybody who followed elliott wave as i know some of our viewers do or who want to know what has been your success with timing and and how is that helped you or your investor class or your readers rather with with their investment well let me give you a good example two months ago in april i put out a special issue i'm going to talk about the price of gasoline now we already counted the oil market is over in april of two thousand and eleven that we. an a.b.c. rally as we call it under an alleyway terms it's a countertrend move commodities in oil included beacon two thousand and eight had a terrific crash in the late annoyed early zero nine s. and had recovered sixty two percent which is a normal retracement recovery they traced out an a.b.c. pattern it was in a nice and channels that we said in may last year or oil and the other commodities are tough but this year in the spring people started going crazy about gasoline

prices now consumer prices leg producer prices so we were pretty sure that this is one of these legging indicators again and believing that more inflation more inflation more inflation that's the scene so i put out a special report and i said look we've had predictions of four twenty five gasoline that's the lowest we've seen we've seen side dollars a gallon six dollars a gallon seven dollars a gallon and eight dollars a gallon predicted in the last week and a half this is a classic sign of a peak so not only do we have an alleyway reason to be negative or bearish against bullish if you want to buy gasoline on that price but we think this is the kind of cost of belief that occurs right now turns and that it was actually a week after the national average of gasoline prices peak they were three dollars ninety cents a gallon that fallen down into three fifty's i believe locally by gas at three thirty three where i live and i've heard some places where it's even under three dollars so that retracement is started and it could even speak to other things if

you've got another minute we can go on about that as well i do we do have limited time in there so much i want to get to so i do want to ask about a couple of other things that you've been talking about which are really interesting and one has to do with with the stock market which we've been talking a bit about but in your report you cited a gallup survey that found that roughly fifty three percent of households are still in the market that's i guess as of april and this figure is down from fifty five percent in two thousand and seven is this number still higher view and how long do you expect it to go how low rather before we reach a long term bottom. externally it's really i mean the highest reading i believe that occurred in one hundred twenty eight one hundred twenty nine was about ten percent of the american public and right after that and of course for the century before that it was much lower single digits and people just really embraced finance in the nineteen late one nine hundred sixty s. then they kind of got tired of them in the seventies but when the market turned up in one thousand eight hundred that was it they became married to finance they loved

it it was one of the great booms of all time it was triple the rise in percentage terms in triple the time of the one nine hundred twenty s. a great boom that we had back then so people have embraced stocks and in fact all over the world and we watched over those years as one by one former communist countries started having stock markets you know the soviet union in the end china and vietnam and it's incredible so we were saying this is just a great great fifth wave peak in global optimism in and then look at all the results that it's giving us well now that trend has turned and so i think by the time it's over we're going to be probably back in single digits in terms of people being interested in the stock market the last big turn of this type with the south sea bubble in england seven hundred twenty the bear market less than sixty four years and i'm sure two or three generations of people said whatever you do don't touch the stock market so i think when you get to these extremes and this was even bigger in terms of low yield and overpriced values historically generally you swing

to the other direction and since we haven't had any streams the other direction we keep saying look we're not there yet be safe keep your powder dry we're going have a great opportunity once this market does make well and really interesting we just saw the face of i.p.o. which was the most high p.l.o. that we've seen in and such a while it seems we have some headlines showing just how excited the media was at least about this i.p.o. and then of course we know what happened to face planted i think the stock went down around what twenty six dollars today it opened it at thirty eight dollars so how does this. the performance of the facebook's i.p.o. fit into your theories about the loss of retail investor interest in equities lauren that's such an important event we were watching that and saying this is another indication that we're not in any kind of low because if we were to bottom they they would have been able to do the deal but b. if they did do the deal it would have gone on for an extremely expensive price with all kinds of hype and everybody wanting to buy shares in line to buy shares for their kids i think by the way it's going to be

a great lesson for those kids who wind up owning them you know they're going to learn something about the stock market what we saw there was another microcosm of extreme optimism people just rushing ahead to own and it was as if we had a one day reverse a live kind that we've had over many years in stocks and commodities and real estate and everything else it's gone crazy so you know i think it's very important and just told us you know if you think the market's just making a correction here that's not right people are still too willing to jump aboard something new and in addition to the facebook i.p.o. we have a second here but we have seen a trend of just far fewer i.p.o.'s and they've delivered last in that initial i.p.o. so what is that significant to you that's a result of the bear market that's been going on since two thousand it's been subtle and we've had three peaks two thousand two thousand and seven and basically now and then in the interim it's really been a loss of real purchasing power in terms of what stocks are or worse they're real

the real values type in two thousand and twelve years i think are we got about four years ago as a time wise it's mostly over but price is going to be the problem for the next four years all right good word to end on so much more i want to talk about we're going to have to have you want to get as said bob from paul because there's more to discuss but i really appreciate you being on the show today robert tractor he's author and founder of elliot wave international. thank you. all right before we leave let's wrap up with a little bit a loose change dimitri and shannon what's going on let's talk about it the new york times is reporting that j.p. morgan officials ignored warnings last year that could have kept them from this.

so you can make loans or invest the money in securities. portfolio or big bank in fact the future is for just over eight billion dollars but seeing how we manage that portfolio we did lose two billion dollars trading. because euphemistic explanation that has now become infamous now a small group of shareholder advocates called c t w investment group said the bank's risk controls needed to be improved and j.p. morgan officials dismissed the warnings so how shocking we find out that the bank ignored rest warnings but meanwhile we've also received news that j.p. morgan were turned six hundred million dollars in funds held at the bank when m.f. global collapse so are we seeing your kind of a tit for tat maybe j.p. morgan trying to you know give a little carry here or to avoid some of the sticks coming from this direction while what i've found shocking is that all the sudden jamie said. money of the money very

prized things funny that he said that banks make loans and he has said we have his unrealized prophecy of an unrealized losses and potentially huge on realized losses because they thought of this. from what i understand so yeah i didn't hear you that's just how banks do business i mean that's just that's just how it works let's move on j.p. morgan our bank it's a hedge fund yeah it's a had a strong lead actually has a consumer lending arm yeah operation so ok so we'll end on those words let's get to one more story because one in four people in spain may be unemployed we talk about it a lot but one small spanish town showed where they think their values are what they think is more important than a jobs program take a look. so i'm talking about bullfighting reuters reports a small town voted in

a referendum to keep its budget for bullfighting and other festivities and not divert part of the money into a jobs program so maybe they just know that it's not the government's role to create jobs that they're no good at and they'd rather just have their bullfighting which they enjoy. people want bullfighting that's a job and that's the market is the mending. in my opinion this time is good for them you know what are they going to do what are they going to have as miserable and they don't want to be deprived of their one joy in life as a major cultural thing that they enjoy even if it is pretty brutal you can't calculate the. quality of life of these guys this is part of the quality of life bullfighting you know may not be for you and me pink socks. all right maybe this goes all right maybe they do let's leave it there because that's all we have time for thank you so much for watching and please come back and watch our show tomorrow . and in the meantime you can follow me on twitter at lauren lister and give us feedback on the show on you tube dot com slash capital account you should also some

scribe if you haven't you can catch our show in asia d. on hulu at hulu dot com slash capital dash account and from everyone here thanks for watching and have a great night. so much or is that so much about the taxpayers' money magazine she needs to be the bottom people at area just one trying to do is the west when it comes to soft power is the where specifically the u.s. losing its ability to influence others the weak sample. the mission of free accreditation free zones for charges free. arrangements for free risk free. to tide free. download free blog just plug in video for your media projects and free video don to r.t.

dot com. download the official anti up location to your i phone or i pod touch from the i choose up store. what geology is life on the go. video on demand parties mine broadcasts and r.s.s. feeds now in the palm of your. question on the ati dot com.