good afternoon welcome to capital account i'm lauren lyster here in washington d.c. and these are your headlines for monday november fifth two thousand and twelve bond speculators doubled their long exposure to u.s. ten year treasuries last week says reuters reporting the f.t.c. data while bloggers from zero hedge say this marks the highest position since march of two thousand and eight we'll hear from hedge fund portfolio advisor grant williams on what might be driving this move will also talk about why you was elections and the fiscal cliff look like asia where he does his pondering most of the time and it has been a week since hurricane sandy hit the you were asked and from the one point nine million reported homes and businesses still without power last night to reports of

some arming themselves with bows and arrows to protect against looting we're seeing widespread urban devastation and what might this mean for rural renewal i'm talking farmland we'll talk about it and on the big night forecasters strain to make correct call so read the wall street journal headline about the new does business on us election night q election word speed. which is just. there it is more collateral damage from negative real interest rates low explained let's get to today's capital account.

what can i say the next president of the united states will inherit trillions of dollars and debts and unfunded liabilities and this is money already spent or promised owed on things that no longer exist around expectations already priced in by the electorate as we have argued time and again on this show the country's public and private debt burden functions is a drag on economic growth when the money exchange for those liabilities is used for consumption or recklessly wasted on doomed investments and foolish ponzi schemes with this burden of the past on our shoulders we find it ever more difficult to soldier on into the uncertain future and joining me today though to help us navigate that future what it could look like and maybe make sense of this past is grant williams portfolio and strategy advisor for vote days investment management he's in san francisco but he's typically based in singapore so what can i say mr williams we're very happy here in the us of a to talk about all this it's good to

be great so let's start with something that struck me in your recent news letter you said that you were speaking at a panel an investor asked you a question how do i correctly assess risk of a given investment in the current market environment and you said this you said you can't because the market is broken every day we sit in the boardroom of old peasant singapore and try to figure out where and how to invest a partner's capital and every day it gets harder and harder to do i'm curious in singapore where you're based how does u.s. policy both fiscal and fed policy including zur factor into that view of yours. well i mean search is not a us policy it's a global phenomenon that we get we have this really look around the world the concept of easily in japan and recently started you know japan finance minister said recently that they were falling behind in q.e. as some kind of rice might not budge about europe's going to have to it's own sake the only way out is to either let this thing fall apart or create copious amounts of money and they're trying to find

a mechanism by which to do that and this is the same of governments manipulating markets to try and try and push investors further out of the risk but giving them no return at all having cash in the bank is a very dangerous thing to do so i mean you we see we talked investors all around the world who are who assists trying some way to find some kind of yield when you've got a ton of inflation we see no real real real returns really let's need to be up in the sort of three and a half or five percent range and that's a very difficult thing to market want to hear one thing because sitting here in the in washington we just are always harping on the fed we're always harping about is there but are you saying that in this global context where all there are many central banks are engaging in these same policies that the fed is just one part of that or do you see it as a more significant part then perhaps some other major players well they certainly the biggest part of that i mean it's competitive debasement and he comes here with the weakest parents he wins right now everybody needs to base their currency they're all saddled with these debts which they just can't they can't get laid off

without inflation yes and so it was really to default with so they don't get the kind of growth that's going to help them get out of those debts organically so when faced with a choice of the full or inflate that's the simplest and by far the most politically palatable solution is to inflate the public generally don't tend to notice that specially when they've given headline numbers like two percent of the c.p.i. which i think anybody paying attention clearly knows he is why understated gas so then let's get more into that because you wrote the way you sum up kind of the impact of all of this is that when you're looking at how to price rask. how to accurately price things you say the price is wrong because of all these distortions it's a playoff the game show the price is right which turns out is the u.s. and u.k. phenomenon so let's talk about an example of some this wrong pricing ok we have a chart this is from your newsletter at temps now these are supposed to provide protection against inflation the principal on the interest payments rise with them placed on forward deflation as measured by what you just mentioned the consumer

price index this is the chart you published showing tips negative yields twenty years out is the prize right and if not how far from right now it's clearly wrong and this is the this is this is heard many times it is this is the herd mentality people she says and i really shook up investors and there was a loss of trust there's a lot of loss of face people are genuinely worried now and so they're piling it's instruments that traditionally. have provided them safe chips as well. as u.s. treasuries another great example you know u.s. skyrocketing and yet people almost as a kneejerk reaction jump into these things because in times gone by they provide a safe safe haven but intel is going by the jets and the problems with not government balance sheets and some of these diseases from still provide it so you know as we've seen you know the the wild card it gets big taken on to these public balance sheets you know people are running into the it's crazy you know the swiss

swiss farms the swiss of cape deterrence he said you're emplaced to print unlimited amounts of swiss francs in order that people pay and yet the swiss can also borrow money from the public ideas. so the price is clearly wrong and all those things. and it's just a question of when they fall over but you know it. is not the same as leverage for them while these things are inevitable they will also understand this a value we just don't know when that's going to happen and with that in the fair value is there any way to even begin to ascertain what would be their fair value without this herd mentality because looking at temps you mentioned that c.p.i. people don't trust that many people don't believe that accurately reflects inflation so where do we even begin. well that's a that's the sixty four thousand dollars question i don't think anybody really knows what truth anybody has i think we all have this creeping sense that the prices we're seeing are right and i don't think anybody takes the c.p.r.

seriously for. anybody anywhere and yet that's the that's the number that you know poll that was paid off and all kinds of further just months and again just continues and while we have both sides kind of aligned in that they don't want the system to fall over you can get away with these things but this whole thing is a confidence going source in the governments everywhere are desperately trying to create this confidence to get people willing to put their money back to work willing to invest the money taken out of the bank out from under the mattress and get it into into productive operation but the problem they've now created for themselves is as soon as they achieve that as soon as they they create the sense of confidence that they you know it's ok we can take their money out of safety and we can start going out so they don't risk as soon as they do that the first is going to happen is people look at their holdings of government bonds and you look at the negative deals they can take on their level look at the balance sheets of these institutions and they're going to sell and there are seven sites they can sell them out and at that point you know the fed on the answer to lose control of interest rates and then we could see some some really draconian measures started to be

forced out of necessity what do you think would carry that sort of that sort of a chain reaction of events. well santa suit frankly i mean these prices are clearly wrong and we see you see headlines out of europe with people who are relieved that somehow they're going to find a way to keep the scene which don't seem to prosper just for them but let's assume they do find a way to keep receipts you see people running into books and there's only one person to write a check and so do their grades and that's germany so reaction is clearly not the same circumstances but that is purely just most clear and i spoke about this. so-called fancy much and you are. and that's that's where we are the people are genuinely afraid. now comes and they are running to the government for help and the governments are the guys with all the debts it's a crazy situation it is a crazy situation so then on that note would you say that a phenomenon like this where the national bank pegging its currency to the euro and

printing printing printing like crazy but the government being able to borrow a negative year olds and in some cases do you think that accurately reflects the demand for safety as well as liquidity and these are very uncertain times it does and obviously the one thing that government bonds do have going for them is because it's like you know treasuries once they're incredibly liquid and people are prepared to give up some return just to have that liquidity grow but really if you think about it if i told you that you have a quality of any commodity where the supply and the price were both at all time highs you kind of seem to that doesn't really see the economics one i want and yet here we are we have we have government bonds because the world supplies all time highs. and prices all times and those things it can last i spoke about stein's law which is a very simple economic law and it's this is something chemical and for that it will

stop and that's it is simple it's beautiful but it's absolutely true you know ultimately government bonds cannot stay at their all time high prices at all time are supplies forever. at some point gravity and seventy reassert themselves and the process of the full significance of gravity and sanity to things the lagging today as central banks bend the laws of physics so my question are heavily indebted governments as well as their central banks with their easy policies are they essentially borrowing stability from the future and order to forestall volatility today that's absolute is a great way of putting it's absolutely worked and obviously we have to we have to put this in the context of the political so i don't simply is this whole saying it is very much a political moment and so politicians don't like constituencies they don't learn from the same they don't borrow money from the future don't borrow safety from the future. for the future if if and wherever they can because ultimately as your guest

on your previous show was saying that they can borrow this from the future as those doesn't happen on their watch that's fine and so that's what was it we're seeing this tremendous intergenerational transfer of assets from kids and grandkids so now . look it's wrong in every kind of way but this is this desperate need for stability and this year olds or correction. when they have been part of the business cycle for hundreds of you i don't see what the big series other than the fact that they let this thing get so far out of greenspan's keeping interest rates so low that you know some you. let this thing gets. monster has now taken control of the part of actually flying since full business practices right and you know when we get back i want to hear about what you think about the u.s. elections because you're speaking about politicians they don't want volatility is so i'm curious how you think what you think is the significance of these elections in the u.s. especially from where you're based in singapore so more with greg williams in just

a moment and still ahead right here the mainstream media has been burning everyone with every single detail about the elections but. is there any chance that they can grow up a announcement over who is america's next commander in chief we'll tell you how the networks are working to avoid any mistakes and what thing mean first be maybe reflective of envy economic times that's all in tonight's loose change but first our closing market numbers. governor romney are we both agree we agree we need to bring the tax rates down i felt the same as the president did governor romney i'm glad. you agree let's come back to something the president i agree on and there to you agree that the voters

have a choice get upset when you wonder who to vote for when romney and obama agree on so many things remember you do have other options come november sixth tune in to see the second round of debates between the major third party candidates right here on r.g.p. . i will fight all that i also promise that i find every single day a member of you. will find. my own father.

welcome back in the u.s. any glance to a newspaper or a t.v. screen and it's just you want selections all the time but how much do they matter to say an investor sitting in singapore trying to figure out how to invest clients' money well lucky for us grant williams is here to help us understand that he's dr g. advisor for both us investment management he's currently in san francisco not in singapore where he's typically based but mr williams welcome back i want to know being based

in singapore are the us elections a big deal to people in asia do they care or does it matter. farting there i think people care you know i think i think you have to care about i think the important thing here is is the aftermath of these elections and it seems we're getting very mixed signals everybody's very part of south and the democrats are actually convinced that a bomb is going to be elected and publicans are actually convinced that romney's going to get it in the sun but i think what we see in asia is that whatever happens you're going to have this terribly excited house senate white house and that's can be very difficult for to get things done and it seems. never certainly not in my living memory have the parties been so far apart and this complete lack of bipartisanship cooperation middle. and so i think when you have a comes if obama gets back in i think republicans are going to be very resentful of that it looks like they're going to have control of the house so to make things

very difficult for him i think from the get senate democrats are early to be similarly so about things so whatever happens i think we're going to get some kind of gridlock post there and that's really going to leave our friends there but i think he is the most important player in all of what he does out of two thousand and fourteen and so you know we have this crazy situation where we're going to have central bankers setting policy i think pro-business i think romney has made it clear that he's certainly the current business candidate and that seems to be the big issue facing us is that we need business to feel more comfortable investing which they really don't and my conversations are over the best is around the country to people are are really uncomfortable with the current administration and their attitudes towards business look i'm not a republican or democrat asking you nice guy to comment on the only access to the best of times but i think the aftermath is going to the most important thing with the fiscal cliff approaching. that's going to suddenly become very very important

everybody i think all of us attention paid to it now because it's all because you say everywhere you look it's all about the campaign but we're going to end up on november seventh with a new president and then suddenly to. it's going to loom very very large and if we do get this divided after mosque selection where both sides really really dislike seems to me to be toast and we don't want to work and don't want the other side to get their own way we could be in a situation where we stand since last august when they looked at ceiling expire and we had tremendous forces the markets when you down for instance or so they are investors everywhere we do worry about this election we paid very very careful attention to it. but we're more concerned about the after mass which of the guys gets it ok and terms of the aftermath one large part of that too is the government debt and the deficit so i mean that's a concern that i hear from so many people how is that they would in asia especially in a region that funds so much of the u.s. borrowing in terms of the governments at least. the interesting thing about zero

zero we we as a continent went into this into this crisis and saw a bit of shape in the west and that was because back in ninety seven you know we had the asian currency costs and you know there was tremendous force as you know there's a lot of damage done to a lot of these economies but it gave them the opportunity to get their balance sheets in much better shape and with the exception of japan which is a huge perceptions you know some of the smaller economies in asia singapore particularly. sar and also you know states than those in the west and so we worry about us and we've been through a selves in recent memory but the extent to which asia suffered was. far far smaller a comparable situation should the united states to get done so past so it really is to us it's all about the dance or what to do about it and the sense you know you're certain is that there really is nothing they can do about it at the moment except try and inflate that data was interesting and you know when you're talking about

the volatility in people's concern about volatility after the elections one thing we saw the speculative long exposure on the ten year treasury. more than doubled in the past week to the highest position since march of two thousand and eight does that have anything to do you think with investors betting on volatility. that i think everybody who's in these markets and pays careful attention i've yet to have a conversation that anybody who doesn't think at some point the market's going to top out and it just feels like perhaps people are now thinking this could be an inflection point and they're starting to charges themselves i think they'll be very close stops on those positions i don't think it will take these huge directional bet but around events like this we tend to get all the sellers so we tend to get to reactions out and the bond markets sort of you run for credit cards and just quickly before we go on this has you look into farmland headed back to land and tell me tell our viewers quickly why. i think some of your thought is

a perpetual asset and someone will will if you're growing food for example you're always going to you are going to get c.p.r. you will get frustrated because food is an essential commodity it goes up people need to meet more people need to eat. more people need to eat higher up the food stamps we get a lot more people switching from a grain most diet to a protein based on a knowing agricultural land makes false sense of the world and it's something that people worry that it's going to slide across to where they're not making any more bearable and while gold is a sensible safe haven in times like this you know we do our agricultural lands as gold with a coupon you know we saw we could choose crops you so much so we tend to get that and you lose something else and it is a perpetual asset i mean there are obviously issues around single farms and we're only looking to console us arms right across the world to start versified you know in every way possible crops whether climate political jurisdiction and they are

doing that you hope that we can get some kind of balance i don't return on potential asked very interesting some of said that that farmland dirt is like black gold. maybe you'd agree to thank you so much for being on the show grant williams strategy advisor for rope as investment management. all right let's wrap up with loose change dimitri kofi anan us even though the elections are still a day away the mainstream media is obsessed with topping out so much election data out there it'll make your head spin. the two main candidates for president in two thousand and twelve are tied in mar world this is

a tired martha the pros it was forty seven point nine governor romney forty seven point four and the president does lead romney but it's narrowly in the margin of error forty eight forty seven among likely voters i don't think i've ever seen a race that is where everybody is as i'm certain as they or it is there's been as much contradictory and conflicting poll data the president is holding on to an eight point advantage among women one shows them tied at forty eight percent if you look way down at the bottom there the others give the president i don't know somewhere between one and three point edge depending on which one you look at there . so an obsession with polls an obsession with trying to forecast what is going to happen what's interesting is that despite trying to have the most up to speed data the media is also trying to avoid mistakes like we saw in two thousand where many were reporting that al gore had won when in fact he had not their efforts to avoid these mistakes have included them improving their modeling and they have more

software and they're consulting with political scientists erring on the side of safety allegedly when making a call but this meeting with trying to be i guess. more precautionary what does this remind you of this no this is this is again this is directly a result of zero percent interest rates and quantitative easing ok i cannot stress this enough this is the story of the space time continuum and i'm not even kidding all right everything was already about now now now yeah everyone wanted everything yesterday no they wanted the day before yesterday ok because interest rates are so low that we were sucking duration out of the of the space time continuum not just of the markets but of the future all right so that's why everyone's like yeah it's true it's true and it was psyched up here as i made sure i was going to have an argument here is the problem i have with this argument news organizations have always tried to get the information nation out quickly and fast and now they're just adding to their resources because they don't want to totally have a focus like they didn't two thousand which was about speed we didn't have negative

interest rates are some zero percent interest rate first of all one so i don't get why there is this i think is true with first of all. i don't believe the fox news is trying to avoid calling it early for whoever it was i don't think that i don't think i'll call it early i miss him b. c. and functions want to color because it's part of their strategy and they said we want to call the early for obama so they can secure their victory for their sycophantic president and then fox you want to get run over because that's who they decided they liked even though they were in two thousand and eight right ok well the one thing that i would add is that a lot of these news organizations totally messed up the supreme court decision on health care and they probably just want all the way up or down arms are not going and that would render a lot of getting it wrong ok let's move on because this is pretty interesting it's not a secret that america is falling out of love with their cable companies even though many would say people america obsessed with their t.v.'s but in fact the number of people who are dropping their subscriptions are really affecting business. prior to

twenty ten years the pay t.v. industry never suffered a quarterly loss in subscribers but has repeatedly since then only three quarters of growth since two thousand and ten certainly a lot of people choosing not to subscribe to cable and using netflix and saturday using the internet i've never seen a church it really speaks to this to me a seismic shift a seismic home watching all. so they're talking about a seismic shift in people that are actually foregoing their cable boxes and for going to be and they're going online to get their streaming so as a result time warner cable for example is driving attention to their high speed data and online streaming where more people are watching shows the company just reported and so that's where they saw some of this shifting but dimitri what's really interesting about this is used to work at cablevision where you never thought people were going to give up their t.v.'s right yeah that was actually interesting because i was part of a chorus of over group brains you teach it profitable it's important trying to show it was well it was small but we were focused on cable we're looking towards the

future and i want to think you know if you're able to be dead in a few you know five ten years whatever but i was surprised to see how resilient wasn't people really were fixated on their cable box when we do focus groups people are obsessed it's like a drugs on the one hand this is great because we're fighting addiction in the united states so who are breaking their addiction with t.v. it's a pacifier medication and it's also interesting that what's happening is that the budget side the the the the money side is what's driving people to cut the cord there's not so much that they don't want anymore they can't afford it it's the economy isn't your it's forcing them to part with eventually they were going to cut their electricity bill although i know you don't want to certainly make them know that they could live without without electricity or gas i don't know about that and did i mention that we're on you tube and hulu both online video streaming to we're on do it all right with that that's it for our show today thank you so much for watching be sure to come back tomorrow in the meantime you know you can follow me on twitter at lauren lyster you can like our facebook page you can watch any show you misstate you tube dot com slash capital account watch just in h.d.

on hulu and for everyone here thank you so much for watching come back tomorrow and have a great night. wealthy british style sign. on the front.

market why not. find out what's really happening to the global economy with mike's concert for a no holds barred look at the global financial headlines kaiser reports. now from. more news today violence is once again flared up the film these are the images the world has been seeing from the streets of canada trophy child hope for a shelter on the day. the four.