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 moods business on us election night q election word speed. which is just beginning. there it is more collateral damage from negative real interest rates will explain 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 volt 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 in an investor ask 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 easily only a. recent study in japan finance minister said recently that they were falling behind in q.e. as it is in some kind of race and might not budge about europe's going to have to

it's own sake your own 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 for new coating 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 do so we speak to its investors all around the world who are who assists trying to 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 once you know 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 weakest parents he wins right now everybody needs to base their currency they're all saddled with these debts which is just cause 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 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 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 and to play out 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 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 herd mentality people two thousand i really shook up investors and there was a loss of trust in the loss of a lot of folks and people are genuinely worried now and so they're piling it instruments that traditionally. have provided them safe harbor chips as well german . u.s. treasuries another great example you know u.s. skyrocketing and you know people almost as a kneejerk reaction jump into these things because in times gone by they provide a safe safe haven but intelligent by the debts and the problems were not on government balance sheets and so least visas from still provide that so you know as we've seen you know that the private jets been taken on to these public balance

sheets you know people are running into that it's crazy you know the swiss swiss farms are the source of k. deterrence he said you're pledged to print unlimited amounts of swiss francs in order that people pay and yet the swiss can also borrow money from the public to society is negative rights 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 make you find 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 her 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 but that's it that's the sixty four thousand dollars question i don't think what he 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 or. anybody anywhere and yet that's the that's the number that you know told it was a dos 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 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 it into productive operation but the problem they have 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 so they don't risk as soon as they do that the first is going to happen is people look at their holdings are government bonds if you look at the negative views they can take on their level look at the balance sheets of these institutions and they're going to sell their seven sas they're going to some part

of that point you know the fed on the youngster 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 sanity returns frankly i mean these prices are 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 him which don't seem to prosper just for them but let's assume they do find a way to keep producing he says 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 see you mentioned earlier on. and that's that's where we are you people are genuinely afraid. now comes and they are running to the government for help and

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 and obviously the one thing that government bonds do have going for them is because you can seek 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 any commodity where the supply and the price for both at all time highs you kind of seem to that doesn't really state where you can or which 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't last that i spoke about

stein's law which is a very simple economic law that says if something chemical 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 seventy research 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 well that's absolutely worked and obviously we have to we have to put this in the context of the political so i don't simply this is wholesale it is very much a political phenomenon and so you know politicians don't like institutions that don't learn from them since 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 is 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 some you. let this thing gets. monster has now taken control of that part of actually flying sense 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 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 alas. but is there any chance that they could grow up the announcement over who was america's next commander in chief will tell you how the networks are working to avoid any mistakes and what they need first be maybe reflect about indeed 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 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 trying 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 the u.s. elections a big deal to people in asia do they care or does it matter. farting i think people care you know i think i think you have to care and but 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 in 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 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 they can make things very difficult for him i think from the get senate democrats are early 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 just a bit and 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 is this 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 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 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. 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 since last august when they looked at ceiling expire and we had tremendous forces the markets when you don't expect soon so i think they're 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 deficits 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 governments at least. the interesting thing about zero zero we we as a continent went into this into this crisis and saw a better shape in the west and that was because back in ninety seven ninety eight we had the asian terms the 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 sections 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 it ourselves in the 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 donors or what to do about it and the sense you know you're serving 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

. like this i think everybody who is in these markets and pays careful attention i've yet to have a conversation to 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 sort of you run for credit cards and just quickly before we go on this has you look into farmland 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 soups up so we 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 human while gold is a sensible safe haven in times like this you know we knew our agricultural lands as gold with a coupon you know we farm we could choose crops you so much so we tend to get that annual yields from this 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 to cops whether climate political jurisdiction and the like 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 co famous even though the elections are still a day away the mainstream media is obsessed with topping out so much election data out there to 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 uncertain 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 and obsession with trying to forecast what is going to happen and 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 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 be over now you know 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 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 issue with first of all. i don't believe the fox news is trying to avoid calling it early for whatever it was i don't think that i don't think i'll call it early i miss him you see him function is water color because

part of the strategy and he said was you want to call the early for obama so they can secure their victory for their sycophantic president and then 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 to know 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 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 shirt 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 forgoing t.v. 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 the rover group brazier teacher product of a little support of 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 cable 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 issue is what's driving people to cut the cord there's not so much they don't want anymore they can't afford it it's the economy isn't it your it's forcing them to part with eventually they were going to cut their electricity bill although i know you want to certainly make them know that they could live without without electricity or gas and did i mention that we're on you tube and hulu both online video streaming to we're on to 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 mean time 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 to hear it thank you so much for watching come back tomorrow and have a great. excuse

me going to. let me. by sort of i don't agree you don't agree with. my sony isn't it larry and i don't know would it be our greatest priority for your fair. share of your country. if the country is. to close the moon or hope to help you find it. in so many old says war and need some sleep.