has warned that the aggressive response of m.p.'s to the olympic security shambles put recovery at risk by discouraging business is to come to britain neil woodford investment manager at invesco perpetual which owns approximately five percent of g four s. the shares said that the verbal dressing down delivered to chief executive nick buckles at last month's home affairs select committee meeting was like watching a medieval persecution if this is the new way parliament wants to treat business please parliament don't be surprised when businesses decide this isn't the country for them not for of well first of all this phrase recovery put the recovery at risk there is no recovery in the u.k. there is a bounce for bankers stole a few billion quid but the employment picture has gotten more the economy is to contract doing and the g.d.p. is shrinking there was no recovery there was a quantitative easing by the bank of england that was stole that was put the pockets of a few bankers they can call that a recovery and then second of all this comes just crazy when a defense contractor is just another shyster bleeding the economy dry you don't

need all that that nonsense of gold product that they're selling get rid of those people that would save the economy immediately so let's look on to another very close all of the dark of the u.k. political system let's look at how he reacts to competition this is a tweet from rupert murdoch simple equation free open uncontrollable internet versus shackled newspapers equals no newspapers let's get real so instead of competing. he wants to raise barriers to the free internet not remove his barriers as they are perceived in the newspaper space he doesn't want to compete you know that's murdoch's as i've been saying for years of open competitive landscape he's never been able to compete if he has a monopoly position with satellites you can compete but when it comes to real competition he's a failure as

a businessman always has been and here he's castigating the internet because it's providing competition to his model of doing business which is out of business does he want what he wants the government basically to give him protection you know if he's a buggy whip manufacturer he wants with cameron to give him protection as a buggy whip manufacturer and his model of doing business was out of date rupert is an octogenarian porn vendor and he's going the same way as porn is going the internet got rid of you know the porn market in l.a. that's getting room murdoch for the same reason you can get the same stuff online for free so just step off stage a little lonely old bat so here's a government again in this next story intervening into the markets creating chaos through choosing favorites and on top of this you have an election happening in america so of course all sorts of political parties are putting out platforms that are either stupid or a hoax here in the u.s.

right now farmers are king during an election season you know the heartland of america fades me wave ethanol mandate livestock farmers in indiana and across the nation are calling on the federal government to lift the mandate on the production of corn based ethanol that they say is squeezing drought devastated corn supplies and pushing up the cost of livestock feed some farmers fear the government's decision to promote alternative fuels by mandating the production of thirteen point two billion gallons of corn based ethanol this year is pushing the price even higher and could make feeds. scarce danville pork former david hardened says quote a waiver would at least let the market determine who is going to buy the corn and at what price the american never graduated from the circus side show when it comes to politics the geeks and the freaks that are like a mitt romney who will promise anything the city slicker comes into the hayseed

town and offers old cars a thing to the people you know and they never figured this out they these midwestern people always vote for this any and from the city every time this is a guaranteed winner you can't go lose you know. eat can't lose but by betting against the naive a day of these midwestern works every time well here are there not naive because these guys are saying let the market decide what the price should be the government is introducing a mandate and saying this is what it is so all the other side when the government intervenes maxim provides their favor and somebody so let's look at who they're favoring with this because there are some in the midwest who are very happy with this tipton corn farmer allan baird he called the mandate one of the most significant things that has ever happened in his career because it helped his industry to overcome low corn prices which were below two dollars a bushel and parts of two thousand and five corn now sells for about eight dollars a bushel baird's sells thousands of bushels of corn he says about thirty percent of

his production to not even all plants for fuel production but you know the article points out max the food prices are rising because of this all the corn is being diverted according to a mandate to provide renewable energy in the meantime it's creating winners and losers the guys who are raising beef cattle are losing because they have to pay a lot more they're having to compete with the corn ethanol guys who are receiving huge subsidies to make that ethan all so they're creating winners and losers in the meantime the globe loses with the high food prices well the globe has been losing for decades because the american corn is free is receive government subsidies for decades as a result corn and corn syrup is sixty percent of all processed food and you have thirty percent of americans obese as a result health care skyrockets due to the subsidy of the corn industry's been going on for decades and just because the ethan all just a new variation on because they can't compete again if they're murdoch or

a farmer or you're putting out content you know trying to compete once in america instead of always relying on monopolies the military and mayhem there are things which bring on the cause a report by. don't know why we're coming away stay right there. dreaming of a sea round trip with open air entertainments. a little minute just to get in better shape. and cuisine with all my healthy ingredients. in this case something to. our summer sales on our cheek. clock.

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welcome back to the kaiser report i'm max kaiser time now to go to boston and talk with professor yanira barre yam founding president of new england complex systems instant. professor welcome to the kaiser report good to be here all right professor i want to get john i read your report and i think it's in st louis important that people take a look at this year report the food crises a quantitative model of food prices including speculators and ethanol conversion he looked at various possible causes for food price rises tell us what factors you eliminated as the cause of rises which digit models conclude were the cause in general. there are the idea that supply and demand could fully or current for the price increases was not which was shown to be done on a simple there are two factors that are important one of them is

a supply and demand factor that's the for increasing conversion of corn to ethanol and the other is of the effect of speculation on commodity markets. following the deregulation of the commodity markets in the year two thousand those are the two factors. the corn to ethanol conversion has given rise to a rabbit but smooth increase in prices starting in about two thousand and six. and the speculation has given rise to sharp peaks in two thousand and seven eight in two thousand and eleven and it's the analysis that we did in that all right so professor talk about the deregulation of the year two thousand so you are referring i would take it to the commodity futures modernization act this act of course which came at the very tail end of the clinton administration essentially legalized portions of the financial transactional ised economy that previously had been classified as pure gambling now i want to do you also mention the word supply and

demand there and typically supply and demand are drivers in any economy they have buyers and sellers and they meet in the market and a price is mitchell excepted but we're entering post two thousand but really building for a couple of decades. they're an economy that's really more systems are and it and requires the kind of work that you do in systems analysis and calm complex systems analysis understand what's going on because as you describe food prices you're talking about multiple layers of of complexity of derivatives of betting that's going on the financial ization the chaz acts all ization and at the end of the day the market itself is become something very very different over the past twenty years than what it was up until that time correct the suggestion did or the science that we're doing won't be helpful in understanding markets or you can surely. there are two ways that the science of public systems acts however can.

one is through perhaps direct intervention where things are not working the way they should. that's a kin to traditional government interventions price controls and so on it may be important under some circumstances and informing them with the scientific analysis they can point to for the impacts of policy choices would improve of course the nature of those policy choices but there is another approach which is equally important at least and that is by understanding the functioning of markets themselves when realizes that. effective market functioning depends upon structures that are in place for those markets to function within so regulations are not actually and pathetic to market function they are actually essential for

market function now you mentioned the issue of the deregulation you also mentioned the issue of derivatives and so on today we are at a time where the deep concepts of deregulation have been prominent and have affected policy decisions of both parties and have led to deregulation that has undermined the very structure of the markets themselves so after the during the period of the depression after the crash of twenty nine but for other reasons as well regulations were implemented there were a frameworks in which the market function banking frameworks market frameworks both for commodity markets and for star markets and those regulations serve the economy well and in their effective stabilisation of the otherwise free market system. they provided for

a kind of tremendous growth so by recognizing that those regulations those or other rule hikes of regulations that are creating a framework like the the structure of a building. in which activities can take place they actually and mabel the free market to function well we can marry the two approaches zero the free market and the regulatory side and realize that they're really not contradictory at all they really require each other as long as one understands how to implement appropriate regulation right professor seems remarkable that in the discussion of the crisis and the. paris until the one nine hundred thirty s. it's always about whether there should be deficit spending or not deficit spending but nobody seems to talk about the fact of the regulatory framework that was created at the time which gave rise to the recovery and it seems to me that that

regulatory framework glass steagall f.b.i. see the securities act of thirty three and thirty four was the key in the recovery all to me but i want to ask you something about systems analysis for a second if i have a very complicated system an error a complex system analysis on a list and that system let's say is tied to units of risk if i add one unit of risk to that complicated system and my adding to the complexity in in a linear way or am i adding exponentially the risk to the system professor whoa. the answer is more subtle it's neither linear nor exponential it's usually some power law but what it means is that. indeed there are extreme events that are much more likely. recently. been called black swan events right they're much more likely than we expect based upon the quote normal distribution of

behaviors and complex systems or are generally characterized by having a much higher probability rick stream of grants these are collective actions panics and bubbles and things that involve many people are many actors doing the same thing ok let me let me jump in here for a second time in interrupt but agrees i bring it up two thousand and eight the system around the world financially seized up principally because of the inability for various counter parties to make good on their bets in the derivatives market as a response to central banks kamen and effectively added more liquidity. morphy out money more systems complexity with tarp and other fines other debt facilities more layers of debt more layers of complexity so the question is is the system now five years later or more fragile and prone to systemic

collapse than it was a two thousand and eight or is it last fragile or is it the same what we have is a system that used to be able to stand as a building because it had all of the beams and structures in place. in during the deregulation which is not that long ago i mean the banking deregulation happened at the same time as the commodity market deregulation and the stock market deregulation happened in july of two thousand and seven only months before the market laughs so all of these major actions of the regulation are all very recent what we've done is we've taken out the support structures of the konami care of the of the market activity and as a result we have an unstable system a system that is cheap teetering and taught to ring and showing signs that it's about the lapse of every threat so what we have is we have the government propping it up standing outside the system and saying we've got to hold you over if you're

we've got to hold you up over there trying to prevent it from collapsing that's obviously not an ideal way to run a system that you have an unstable system that one is artificially propping up and really that's what's happening more than that the government is outing layers of complexity though the idea that it's adding complexity is not a reasonable because of course by adding these various external structures one is will roll increasing the structural complexity of the system in a way that's not functionally perfect right and by government we are referring to me and the folks in washington that have beholden to the same bankers now talking about the price of food because this is obviously a big issue. there is a ratio out there that people quote saying that when a budget of a family gets to forty percent needed to cover their food costs as was the case in egypt it's a recipe for revolution ok that's obviously

a very broad form formula but is there a connection between this the amount of money is spent per month on third and the population staging a revolt of some kind professor if you plot the price of food over us. the price increase that we spoke about later how did these peaks in two thousand and seventy in two thousand and eleven two thousand and seven and eight be. coincided with forty food riots countries different countries where there were food riots and the two thousand and eleven coincided with the arab spring the conditions of political circumstance and the konami conditions the countries that have been involved in revolutions recently have been around for decades and the question as to why such revolutions would happen now or in the last few years is simply addressed by pointing to these food prices peaked in fact we have identified

a particular threshold. of the. food that revolt organization of the un's food price index. about two hundred ten one can practice for inflation a little bit but it's at that level food riots and revolutions become very likely in the world and indeed i'm sure that you're aware and you have spoken about on your show the impact of the drought that's happening now and even though prices went down the first six months of this year. this as a result of the drought the prices of shot up again and that's pushed us above the level of our threshold or more in the range at which we begin to be worried about social unrest food riots and revolutions and our projections based upon the mathematical model that we've developed for food prices are that the prices are

going to continue to increase. a lot of that is due to commodity speculation rather than through the drought itself but either way the food prices are going to increase and and that's going to put us even higher than the previous two peaks and the danger zone surely of widespread revolution and our projections are that this isn't going to take much time a few weeks to a few months is all. all that it will take to be over the threshold and then the question becomes on the response so how do countries buffer their. note that their citizens or the poor from the stress of the food prices what happens and everywhere in the world now depend upon how we react. there are a big policy options which if you look back i can tell you about but there are also of course country based options in terms of the interventions that are country

takes to protect us from the rise in all right professor nearby yeah i'm a founding president of the new england complex systems institute rata time but thanks so much for being on the kaiser report pleasure thank you ok and that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert and or thank my gas professor bahry am yeah nearby i am founding president of knowing on complex systems as a tooth if want to send email please to us at kaiser report on r t t v dot ru until next time x. guys are signed by a. dreaming

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russia we've got the future covered. good afternoon and welcome to capital account i'm lauren lyster here in washington d.c. and we are on vacation and you see we've been broadcasting since october so that means we're a little overdue for a break but in that time and in just the last few months we've interviewed so many amazing guests from jim grant to mark father to jim rickards even joining me as a co-host and we've covered so many topics that are relevant on any given day whether it's the fed or the eurozone crisis so we put together some of our very best and most popular episodes from the last few months for your viewing pleasure and the time while we're off and you can look forward to all the new shows starting september fourth so mark your calendar and don't forget interviews can all be found in their entirety on our you tube channel you tube dot com slash capital account

but for now let's get to today's capital account. 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. 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 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 asleep if 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 of excess 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 elec dug male

alex with beginners. as as that process proceeded. the the large antlered elk would have large antlered offspring and they would grow a larger and larger which is such a generation's. ultimately he ended up with elk that had a hundred pound antlers and they were ill suited to work to forage they were could had to keep their heads up and according to the leading theory of their extinction the antlers became so large they contained a 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 develop a kind of osteoporosis and died off. well you know at a time like that you know say about us in the early ninety's right said fred 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 an enormous debts and and regulatory strictures that are that are are making it difficult for us to to even maintain ourselves yes 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.