it has been a week since hurricane sandy hit the u.s. 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 calls so read the wall street journal headline about the new does business on us election night q election word speed. which is just because. 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 service is not a us policy it's a global phenomenon that we get we have this really look around the world the concept of easing in japan and recently started you know japan finance minister said recently that they were falling behind in q.e. as it is in some kind of rice and might not budge about europe's going to have its

own sake the only way out is to either let those things 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 governments for new creating markets to try and try and push investors further out the risk but giving them no return at all having cash in the bank is a very dangerous thing to i mean you know we saw 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 sometimes one here 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 that's certainly the biggest part of that i mean it's competitive debasement and he comes here with

the which is fair and 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 union 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 insulate them it's the simplest and by far the most elicited simple solution is to inflate the public generally don't tend to notice that especially when they've given a lot of numbers like two percent to the c.p.i. which i think anybody paying attention clearly knows that 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 at the playoff the game for 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 in the interest payments rise with them placing 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 this is this is heard many times it is this is herd mentality people two thousand a really shook up investors and there's a loss of trust there's a lot of loss of focus and people are genuinely worried and so they're piling into instruments that traditionally. have provided them safe harbor chips as well german . u.s. treasuries another great example you know u.s. skyrocketing and yet people almost as a knee jerk reaction jump into these things because in times gone by they provide a safe safe haven but in times gone by that gets in the problems with not government balance sheets and so least visas from still provide it so you know as we've seen you know that the private jets big taken on to these public balance

sheets you know people are running into the thirty it's crazy you know the swiss the swiss farms the swiss of cato terms 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. roads so the price is clearly wrong and all those things and it's just a question of when they fall over but imminent 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 there for. a 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. that suggests the sixty four thousand dollar question i don't think anybody really knows what truth anybody who's 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 or. anybody anywhere and yet that's the that's the number that you know told it was a dos and all kinds of 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 sort of 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 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 further on that risk as soon as they do that the first is going to happen is people look at their holdings of government bonds if you look at the negative views they can take no they will look at the balance sheets of this institutions and they're going to sell and there are seven sas there are some part

of it that point you know the fed on the other side to lose control of interest rates and then we could see some some really draconian measures started to to be forced out of necessity what do you think would care about sort of that sort of a chain reaction of events. well santa suit frankly i mean these prices are on t.v. 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 lucy and which don't seem to possible 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 if they do that a great job so reaction is clearly not the same circumstances but that is purely just my fear and i spoke about this. so-called c mentioned earlier on. and that's that's where we are he people are genuinely afraid. now comes and they are running to government to help the government so 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 obviously the one thing that government bonds do have going for them is because you can take you know treasuries once they're incredibly liquid and people are prepared to give up some return just to have that liquidity but really if you think about it if i told you that you have a clause you any commodity where the supply and the price for both at all time highs you kind of think that doesn't really suit the economics what 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't last that i spoke about

stein's law which is a very simple economic law that says if something cannot go on forever 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 our supply. at some point gravity and seven research themselves and the process of the full significance of gravity and sanity to things the lagging today and central banks bend the laws of physics so my question are heavily in debt to 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 it great well that's absolutely what we have to we have to put this in the context of the political side and also motley this is wholesale it is very much a political moment and so you know politicians don't like constituencies that don't want volatility 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 could borrow this from the future as those doesn't happen on their watch that's fine so that's what was it we're seeing this is tremendous intergenerational transfer of assets from kids and grandkids to you know. 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 years 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 something you. don't let this thing gets. monster has now taken control of the part of actually flying since food business practices right and you know when we get back i want to hear about what you think about the u.s. elections because they're speaking about politicians they don't want volatilities

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 and just a moment and still ahead right here the mainstream media has been burning everyone with every single detail about the alas. but is there any chance that they could fit the role of the announcement over who was america's next commander in chief we'll tell you how the networks are working to avoid any mistakes and what they need first maybe reflect about been the economic times that's all in tonight's loose change but first the closing market numbers.

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welcome back in the u.s. any glance to a newspaper or a t.v. screen and it's just what you want to 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 drawn to advisor for roll best 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 they wessel actions 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 reelect you and publicans are absolutely 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 to me 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 whoever 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 to be similarly sad about saying so whatever happens i think we're going to get some kind of gridlock post there and that's really going to leave a friend is there but i think he has the most important player in all of what he does out to 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 conversation with 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 not democrat asking you nice guy to comment on them but that's just you know the best of times but i think the aftermath is going to the most important thing and with the fiscal cliff approaching. that's going to suddenly become very very important everybody i think all of us attention to pay to it to 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. but those thoughts is 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 a sense last august when they looked at ceiling expire and we had tremendous fun of the markets when you don't step through so i think there are investors everywhere we do worry about this election we've paid very very careful attention to. what we're more concerned about the ask the mosque 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 viewed in asia especially in a region that funds so much of the u.s. borrowing in terms of the government at least. the interesting thing about zero zero we we as a consonant went into this into this crisis and saw a bit of shape in the west and that was because back in ninety seven ninety eight we had the asian currency costs and you know there was tremendous forces 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 was you know 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 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 is in these markets and pays careful attention i've yet to have a conversation 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 try to save themselves i think they'll be very close stops on those positions i don't think people it's a huge directional bet but around events like this we tend to get all the sellers and we tend to get to reactions out and the bond markets certainly right for going for a correction and just quickly before we go on this has you look at it too far away and headed back to alaska and tell me tell our viewers quickly why. i think some of your thought is a potential 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 come honestly it goes up people need to meet more people need to eat was asia more people need to eat higher up the troops absolutely get a lot more people switching from a grain most diet to

a protein based on a knowing agricultural land makes all the sense in the world and it's something that people worry that it's gone too far and priced too high they're not making any more bearable and you and while gold is a sensible safe haven in times like this you know we are going to lead as go with what we saw we could choose crop to so much so we tend to get that annual yields on this and it is a perpetual asset i mean there are obviously issues around single farms and we're only looking to sell your farms right across the world and start first if i you know in every way possible crops whether climate political jurisdiction and they are doing that we 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 hope as investment management.

all right let's wrap up with loose change dimitri co phoenix even though the elections are still a day away the mainstream media is obsessed with her finger 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 chart 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 on certain as they are 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 and 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 right now everything was already about now now now everyone wanted everything yesterday another one of 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 it was psyched up here i mean it's not going to sit around and here's 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 too so 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 first of all i think. i don't believe the fox news is trying to avoid calling it early for whoever it was i don't think that they rely on color really i miss him you see him functions want to color because 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 who want to get run over because that's who they decided they liked even though they were against romney 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 to wake up and arms are not going to end up with 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 are 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 good 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 that church 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 part of that over group brings you teach a product to the world support and trying to show it was well it was small but we were focused on cable were looking towards the future and i went in there thinking ok cables will 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 the 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 some so much that they don't want anymore they can't afford it it's the economy it 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 you we're on to it all right with that that's ever our show today thank you so much for watching be sure to come back tomorrow in the mean time you know you can follow me on twitter at lauren lester you can like our facebook page you can watch any show you missed at youtube 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. what

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