is in america shortly but the headlines from moscow first of all night scare mongering over syria's chemical weapons potential gets the world community fired up despite assurances from damascus that such be used in the country's internal crisis . and terror concerns for syria grow on the back of a resurgent al qaida to which is accused of the militant almost all the left more than one hundred dead in iraq also from r.t. tonight no letter for the eurozone a tally in mass protest against austerity while the ratings agencies set their sights on the economies including germany so that money matters stateside next an r.t. its capital account from washington d.c. .

welcome to capital account i'm lauren lyster and i want to get straight to our show today because as stocks fall volatility spikes perceived safe haven yields here record lows and criminal libel or charges may be imminent things seem a little crazy as headlines even tout global economy in worse shape since two thousand and nine it just so happens lucky for us a group of investors are getting together in vancouver to figure out how to navigate this terrain right now for what we're calling a sort of anti davos it's a gore of financials conference a lot of our guests are there and its theme is innovate or die empire at a turning point so we want to check in right away with the end see eric he's editor of the daily reckoning and chief investment strategist at a gore

a financial to find out why all of these high profile investors and economic experts are seen such high stakes at this point and what answers they may have so first of all eric thank you so much for being on at your big conference for the year to tell us all about it and also your insight thanks for being on the show. that's a pleasure war thanks for having me absolutely so first eric let's just touch on the conference briefly and what you think of my characterization of this as the anti davos because also my producer tells me that you guys were talking about this conference in the attendees as financial first responders so i'm curious your your explanation of and reactions to both of those comments. well yes i think the davos is where davos is davos is the established order davos is the very comfy co-leader country club ish association of of comfortable c.e.o.'s

and and their government counterparts and this is a conference that's not for them this is a conference that is for regular individuals who are trying to navigate. economic conditions that are increasingly challenging and confusing so they're first responders in the sense that. as a group they understand that some things about the way the markets function have changed and they want to be out in front of those changes so that they're not they're not victimized by them yeah a lot has changed that's for sure let's get into all of this first a lot of concern the headlines today coming out of europe and it's a good point people don't know these days how to weigh the mood angela merkel may be in when they're making their investment decisions which is something you have to factor in increasingly arguably meanwhile u.s. treasury yields today eric they fell to an all time record low on all ends of

the spectrum the ten year traded below one point four percent the thirty year below two point four eight percent but instead of being lulled to sleep you do not think the u.s. should be a slave you think that the u.s. should learn from a cautionary tale from the extinction of the irish elk first eric what happened to the irish. well the irish elk was a was a maladaptive species ultimately so the irish elk. had enormous antlers and the antlers were according to one theory of its other except its extinction were a major component of the sexual attraction of the males so it was a big part of sexual selection the apparently the female irish elk dug male alex with beginners. as as that process that preceded. the the large antlered elk would have large antlered offspring and they would grow

larger and larger which is just a generations. ultimately who ended up with that had one hundred pound antlers and they were ill suited to to forage they were could have to work even their heads up and according to the leading theory of their extinction the antlers became so large they contained sixteen or so pounds of calcium eight pounds of phosphate and the local grasses were insufficient to support that level of of bone growth so the elk the elk because of their antlers developed a kind of osteoporosis and died off. well you know it's kind of like that you know what they're saying about you from the early ninety's right said fred on i'm too sexy for my cat i'm sixty four well that's what happened with the with the elk they became too sexy to survive and in a way the united states i believe is becoming too sexy to thrive we have been

the greatest power on the planet economically militarily etc and in order to maintain that power we're literally feeding on ourselves and building up enormous debts and and regulatory structures that are in our are making it difficult for us to to even maintain ourselves yeah yeah let's bring up the u.s. debt because that's a really big set of antlers the u.s. has in terms of how it's grown and becomes so over sized so what eric though because we're not seeing this in treasury yields what are the maladaptive traits that we see developing as a result of these huge debt outliers. well i think i think what's happening in the treasury market is something that may not be directly related to two maladaptation it's rather

a response by investors to to changes in the marketplace so as your guest jim graham brought up last week there is a bubble in safe haven assets and i endorse that point of view so you have negative yields on five year swiss bonds negative yields on danish that and invisible yields on german u.s. and so on so that's a response by investors to a very real. disease that's caught in the global financial markets in which there is so much manipulation so much so much. fraud so much uncertainty even as to as to whether your brokerage account is going to be there tomorrow yeah that a lot of investors are making what i consider a rational choice in in putting their money somewhere where they at least will get it back right the worry about return of capital not return on capital how does

price fixing eric and the rigging of markets by the fed and other monetary authorities in the west fit in here with the maladaptation and the at risk becoming too big. well it's it's a late stage phenomenon it feels to me in the western world where if we look at europe and the us exclusively. these are these were the powers that emerged in the second world war and there they emerged and strengthened throughout the ensuing decades because they were relatively free market societies and the us has been a free market society for a long time. so as those economies have progressed they have become. a lesson free market oriented to the extent that the zero eight crisis opens the door to government manipulation on a monumental scale so instead of doing what

a healthy organism would do which is to say ok i got up i took a trauma blower i got sick i'm going to just heal instead of keeping dosing ourselves the governments have been involved in in sending bailouts to every possible place they could send a bail out running up that's the process they have been manipulating almost every single credit market whether it's sovereign debt whether it's the debt financial institutions whether it is. mortgage debt now student loan debt and the list goes on and on and on like is the question actually yeah my real world investors is in k. go ahead is incapable of determining ok what's a real price what's a real value what's a real anything and not knowing they they choose not participate right and i want to bring up we have an endangered species list of the endangered species of free

market prices so eric i guess my question for you is what's not on what is priced accurately anything. well as i wrote about a week ago when you want to comes to live war which is the basis of trillions of dollars of loans and securities some have even estimated as high as five hundred trillion which is a number that's so high it's hard to even believe once you start messing around with live war. it is a kin to two moving magnetic north or moving a g.p.s. system you literally don't know where you're going to land or what direction you're heading so. it's something not rigged ok you could say you could say home prices and isn't rigged maybe but then but then the investment value

of a home relates directly back to interest rates and interest rates relate directly back to the fed funds which is manipulating by the federal reserve and to live well which is manipulating the reserve perhaps and by traders for certain so all asset values somehow fluctuate around these interest rates of of of dubious value right and so you're saying people are saying ok well i want to take my hands off the steering wheel i don't want to drive this car this is too scary i don't know where i'm going there are no free market price set goals so in this environment i know i read you said fear isn't meaningful insight i guess i want to know if you think there's a proper response. well i think piers meaningful insight with respect to the financial markets broadly. so. i mean you know again jim brown was on your show talking about growing walnuts. it almost gets the point

where you have to go you have to go so low tech and so extreme in some ways in order to find markets that are relatively untouched so. a walnut tree would be an example but beyond that there are agricultural markets that are still relatively untouched there are number of real estate markets that are on touched there are private partnerships that that devote themselves to facets of the of the credit markets that are relatively untouched. and by those pasts i mean there are there are mortgage backed securities that are offering high yields those had been manipulated and had been. influenced by the by both traders and by central banks but at the moment less so so there are little pockets of opportunity where investors can. can look for a non manipulated financial asset and hope for something better than one point

three percent from a ten year treasury bond better than nothing and along with the congress hears all about by the way is that is the question i think is what the quest for what. now i'm saying that's what this congress is about is about trying to find of the sort of alternative. that's the fair sets that have a chance of providing a return. away from the middle ation of western governments and agencies isn't that crazy that that's that that's what it's come to trying to figure out where these pockets are that are manipulated that actually are fair are subject to the free market and we're looking at walnut trees and farms and other things like that before we go i want to talk about in this atmosphere of fear there are some responses that kick in when you're afraid there's a fight and there's flight and in europe i thought it was interesting because you've been talking about the difference between both of these spectrums in regards

to one country and one investment you have german bund yields which are at record lows but yet you show that it's more expensive or was it a point to insure against german defaults it was more expensive to do that than to insure against a fault of instruments that were rated much lower you compared it to viacom so these are two really different stories but they're both revolving around the same country the same bond market so how are you supposed to know what to do there or what does this tell us even that there is these different fight well light scenarios that's. right without without being too arcane german bond yields are very very low just like treasuries but the price of insuring german that is very very high higher than the debt of lowly rated u.s. corporates so that's a that's sort of normally a conundrum and does it mean something yeah it means the financial markets are crazy it means it's very difficult to to figure out how to how to position yourself

in a safe way. so. you know i don't want to say there's nothing to do here there are things to do but there at the margin and at the core of things that used to be safe i think you have you know great risk things that are perceived to be written safe are actually in fact risky and the solution is relatively simple the solution is to is to allow free markets to operate freely but at the moment the powers that be in europe and the u.s. have zero desire to try to be all right are to step in and ted and yet be allayed absolutely that's the case eric cry i'm so sorry i have to interrupt and cut you off but i really appreciate you being on the show i guess that big antler is what you have heard about aren't true thanks so much eric cry at it are of the daily reckoning. and still ahead record high yield on spanish bonds the i.m.f.

may be wanting to dump the euro falling a ban on short selling in spain and italy and those are just the headlines you've probably seen widely reported coming out of europe coming up after the break mike said lawful tell us the alarming news you haven't heard but first your closing market numbers. is the shoot something inappropriate for the public they can easily be. as she's a war ok. i wish she would have never happened but it has. you

know for a t.v. camera becomes unnecessary with just their own safety all for national. including journalists and inspectors should leave. and the spear companies with such witnesses got a lot more like. one. person . on our team. with. more and more mouths to feed but where will the food come from can science provide the answers if you drew under the microscope. the future covered.

all right where do i begin with europe today there are just there's been an onslaught of headlines all bad pretty much that i've seen coming out of europe indicating that this day a noble solution or at least the pretending that there was a sustainable solution has once again run out as we knew would happen we see spanish yields spiking we see the i.m.f. saying hey maybe we want out a greece is in is you europeans have your other funds all set up and ready to go and those are just a few of the headlines but what about the ones that you haven't seen widely reported mike shed lock has been diving into those he's investment advisor for sick of pacific capital and he is going to tell us all of this really good dirt that you need to know that that somehow is escaped the headlines because probably there's just so many already thanks so much mike said locke mishra being on the show today . oh pleasure to be back on the show lauren how are you doing really well it's nice

to see you you look very happy given how much bad news is coming out of your ass but maybe that's because you've largely been right about europe all along and here are some indications that are kind of on the periphery but are really interesting that you're writing about michelle i haven't heard about black monday in italy but you haven't you're talking about messages on facebook and twitter that have gone viral so what is black monday and why is this significant in your view of black monday it was really just a reference to the markets they were they were europe got hammered today spain was a at one point down five percent actually recovered to be finished only down a percent or percent now for something but in italy we're going to have good contacts all over europe and they send me these links and they might be in german or they might be an italian or they might be and spanish i get links from a guy name brand almost every day from spain but today i go one from italy and it was from a website there was an italian website there was talking about messages

going viral there on twitter and on facebook and it's panic and one person said on twitter anough of this agony this please give us back the euro so the that's what social media is saying in europe it's actually not very pretty if you follow that through that's interesting how do you weigh the anecdotal evidence on social media i guess the twitter indicator if you will against their bits of news and information that you have coming in. well actually you will just look at you i mean there were absolutely soaring across the board today almost one hundred basis points that's one full percentage point from five and a half percent to six and a half percent in spain today on the to your treasury the ten year treasury had seven and a half percent uncharted territory what was it warned us three weeks ago rejoice

the prime minister of spain was saying crisis all of that lasted what three weeks now we're seeing it in italy and the mood is really gotten you know pretty extreme there they're blaming president obama they're blaming i a mouse they're blaming the builder burger they're blaming everyone and we're seeing the rise of the five star movement and i'm really stunned about this one because i don't understand why this is not made front page news in the wall street journal yet but i think it will best be groucho who is a politician there and anti politician almost running for office in italy and he's running on a platform there that says you know we're going to kick out all these politicians and his own personal viewpoint is we need to get off. of the euro and default on it you know that's pretty big news in and you don't hear what i'm going to lauren that

is pretty big news i feel like there is a sense that for whatever reason i haven't really just heard about italy much it's kind of been not i guess the problem child to do your the way that maybe spain has been recently but another thing you point out about italy is ten cities major cities that are on the verge of collapse so what is really at stake here does that mean more pressure for the federal government does that mean that despite the efforts to prop up italy it's still crumbling from with then what do you what do you take from that ten cities including on the lawn of naples ten big cities ten major. it's actually a whole slew of small ruins they claim have already gone bit in the dust and they're talking about defaulting on their debt meanwhile the state of the federal government of italy is demanding more taxes more austerity measures more firings. so you know where does it end i think it's going to end in protests in the streets

and winced when spain or the protests last week i said italy's next i think we're going to see it and that's what they were tweeting about today saying you know we're going to organize some protests here it's going to spill over into italy right now look at it greece is blowing up spain's law you got it always blowing up all at once the nineteenth euro summit has already broke down on the twentieth break that's how the we're going to we're going to declare another summit but what can they do what's going to do yeah i mean there doesn't seem like a lot that they can do i'm with you there but i'm curious what you think is the relevance of protests in the streets of italy because we've seen them all over europe and i hate to sound like a callous person but it doesn't seem like any amount of protests i've seen in the street there have translated into any kind of pressure for politicians they still pass austerity they still do what the international lenders want at the end of the

day so what difference would it make. well i actually made a difference in groups and you know. the radical left wing from what five or six percent to real close to winning the election i'm waiting for the time to learn some politicians are going to stand up in front of voters and say. here's your own truth. golden boy we're going to default on the euro that person someone is going to come along and say that lorne and that person is going to get elected. there is a prediction there i want to prediction from you on this because you mentioned the spanish yields and a key spanish striker yield going above seven percent to seven point five percent but we've seen this before we've seen spain get to this dangerous seven percent yield price i'm curious at what point is there the turning point where spain can no longer borrow from the markets and where spain does need

a bailout. it's there right now it's going to happen i believe the consensus opinion right now is that that is exactly what's going to happen bear in mind that germany flirted with excuse me greece. with. seven and a half percent yeah a major mistake that the greece flirted with that seven and a half percent for a while they came and the president of the e.c.b. john kotter say at that time how many big three parties celebrations did they have overgrazed before greece finally imploded and we've seen a number of these same celebrations here over in spain and denials they were denying today you know we've had so many to dial how many of denials do you have to before the country really implodes and i think we're there i i think it's spain is on the verge of a huge breakdown here i think italy's going to follow and there's not enough money

in the or the self to bail them all out so one of they're going to do we're at a crisis moment here i expect we're going to announce another summit probably this weekend will say what are they going to come up with is there is another rabbit left in the hat i don't think so i've said that before but i'll say it again today at some point that runs out of the rabbits it seems like it's getting close to that key rabbit moment where there are no more little bunnies left to pull out but you say there's not enough money to bail out spain and italy but is there even enough money to bail out spain because arguably isn't there not enough money. no there isn't i. don't see i mean there are a. billion euros for what's really going to be i think it's probably going to be closer to three hundred four hundred maybe more and if this is we're talking about a situation we're talking about a bit this is things not even funded it's not even passed muster in the

constitutional court of germany i don't know how they're going to rule but then the ruling is coming up september twelfth or thirteenth something like so and already they're adding to what they want to use him to do well it's not even get rid of fog in germany the constitutional courts not agree to it and if they do agree to it you can bet your bottom dollar they're going to say you're not raising this above you know five hundred billion and this is a figure well what happens when five hundred billion isn't enough this is why all this pressure on merkel is just misguided there everyone in europe is expecting merkel to be able to do all of these things she can't she can't can't there she wanted to there's not enough money i mean she's not miss universe she can't save everybody and it's very questionable if we're at that point where anybody can really be saved anymore might sound like i appreciate you being here to talk about

all of that remains to be seen to you if that report that the i.m.f. wants to dump greece as soon as the e.s.m. is all approved is going to hold hold hold muster if that is actually true that i that came out with a kind of weird cryptic statement after that so we'll have to see but thanks so much that was mike said like investment advisor for sick of pacific capital and that is all we have time for that's our show today thank you so much for watching and make sure to come back tomorrow and in the meantime you can always follow me on twitter and you can give us feedback on you tube dot com slash capital account. or catch any shows you messed up missed on a clue at hulu dot com slash capital das account from everyone here thanks for watching and have a great night. more

news today violence is once again flared up. these are the images the world has been seeing from the streets of canada. trying to corporations rule the day. sky.